- Ethereum’s weekly fees hit a 22-week high due to the meme coin hype.
- The supply of ETH on exchanges has increased, sparking concerns about a correction.
On the price chart, Ethereum (ETH) is bullish, rising to $3,949 at press time, likely pushing it past the magical $4,000 mark.
The second-largest cryptocurrency is up nearly 15% over the week, according to CoinMarketCap.
The soaring prices have excited traders, with daily trading volume hitting multi-year highs of more than $20 billion, according to cryptocurrency market data provider Kaiko.
The Ethereum blockchain is busy.
In addition to its impressive performance in the market, blockchain was also seeing a growing demand for block space.
Ethereum validators collected more than $190 million in fees during the week, the highest since May 2022 and a 78% increase from the previous week, according to on-chain analytics firm IntoTheBlock.
As a result, Ethereum’s annual fee rate exceeded $10 billion for the first time since early 2022.
Source: IntoTheBlock
The high network demand is due to the ongoing meme coin bull market.
Top Ethereum-based coins like Pepe (PEPE), Shiba Inu (SHIB), and Floki (FLOKI) are getting pumped this week as retail investors return to the cryptocurrency market.
ETH burn rate surges
The surge in fees has also accelerated the rate at which ETH is taken out of circulation. A set amount of ETH is burned for each transaction.
This corresponds to the minimum amount required for a transaction to be considered valid, i.e. the base fee.
According to AMBCrypto’s analysis of ultrasonic.money data, more than 33,000 ETH were burned in one week, resulting in an annual deflation rate of 1.45%.
Source: ultrasound.money
Depending on supply-demand factors, these deflationary pressures could have a positive impact on the long-term economic dynamics of ETH.
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Is there any reason for concern?
AMBCrypto’s analysis of Santiment data shows that ETH’s sharp price rise during this week has pushed total supply gains to over 95%.
Interestingly, nearly 320,000 ETH coins were transferred to exchanges this week. This prompted a correction, raising warnings that traders may look to profit-taking in the future.
Source: Santiment