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Ethereum Supply Milestone: A Nod to EIP-960

Explore the significance of Ethereum's supply dip and its impact on the market, reflecting on Vitalik Buterin's vision.
Published on 2023-12-15

Ethereum's Supply Milestone

Ethereum's circulating supply has dipped below a critical threshold initially proposed in a past Ethereum Improvement Proposal (EIP-960). This development marks a significant moment in Ethereum's history, as the supply of ETH has now fallen below the hard cap that was suggested by Ethereum cofounder Vitalik Buterin.

Understanding EIP-960

EIP-960 was a proposal introduced by Buterin in 2018, recommending a hard cap of 120,204,432 ETH to ensure economic sustainability. This aimed to create a predictable monetary policy similar to Bitcoin, instilling scarcity and potentially enhancing value. However, the Ethereum community opted for a flexible supply policy that adjusts with network demands, rejecting the hard cap.

Transition to Proof-of-Stake

The current reduction in supply reflects Ethereum's transition to a proof-of-stake (PoS) consensus mechanism. This transition, coupled with the implementation of EIP-1559, introduced a mechanism for burning transaction fees, thereby naturally reducing the overall supply. This inadvertent alignment with Buterin's vision of scarcity is a noteworthy development.

Ether's Price Analysis

Ethereum's price chart reveals key market trends. The price currently sits above several moving averages, indicating a bullish trend. Specifically, the 50-day moving average is above the 100-day and 200-day moving averages, often seen as a positive market signal.

Market Dynamics

Significant trading volume suggests strong market interest, supporting ongoing price movements. The price has encountered resistance at higher levels but found support at lower thresholds, indicating a potential consolidation phase. The Relative Strength Index (RSI) remains in a moderate range, not pointing to any immediate buying or selling pressures.

Ethereum's current supply dynamics and price trends underscore the evolving nature of its market and the lasting influence of Buterin's early vision.

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