Ethereum Crosses 0.08 BTC – Trustnodes

The last time bitcoin was at current prices, eth was at around $900. Now, one eth goes for more than $1,600 even while one bitcoin remains close to its all time low (since last bear) of $20,000.

Nasdaq has thus outperformed bitcoin, but eth has outperformed both, and the main reason is because ethereum will become the rarest of all crypto assets, certainly the main ones.

In less than two weeks now, only about 400 eth will be added to the total supply following the upgrade to full Proof of Stake on or around September 14th.

That’s based on the daily burn rate for the past 24 hours of ◊1,600. This varies. During bulls it may be as much as 10,000 eth that gets burned and taken out of circulation. 1600 however during bear might be the more common number.

About 2,000 eth will be given as total reward after September 14th, down from 13,000. From 11,000 eth being added to the total supply every day therefore, worth $18 million, just 400 eth will be added during slow-times, and eth will be taken out of the total supply during more network usage.

This basically translates to $18 million eth being bought everyday as if supply and demand remains static, the reduction in supply by at least $18 million a day should readjust price by that amount.

Knowing this, people have clearly been trying to get in as ethereum’s relative value against bitcoin, and also against the dollar, is up significantly since a merge block was announced last month.

Yet $18 million is still being added to the supply even though these new people are buying. In addition, this new demand may be temporary, just a month old, while the $18 million new ‘demand’ will be permanent.

In two weeks therefore we may see a re-adjustment in this new demand by the people, while the new demand from the network keeps on re-adjusting for months and years.

Thus, that re-adjustment in new demand from the people might be only slight, or very temporary, as they’ll have to keep pricing in, for months or years, the new supply and demand re-adjustment.

That’s our theory in any event, in an attempt to build upon the textbook pricing in theory which does still apply to an extent, but rather than the pricing in being a one off event, as far as we have seen it tends to be a fairly drawn out affair for cryptos.

The other aspect is the PoW fork. They’re sending miner fees to a multisig, so this can no longer find neutral objective ‘support’ because it is no longer quite eth, just PoW, but effectively a completely different thing that has nothing to do with eth, conceptually speaking.

However, it is an eth fork, and a defi fork, and an nft fork, and it is the very first of that kind still. Its value is also still, arguably, not zero even with these ‘defacements’ because it will be a final running copy of current eth, something that arguably in itself has a non zero value.

As it happens its value currently is $55, or 0.034 eth, which is an insignificant amount but still more, far more, than pretty much all stock dividends.

So this ethW fork most likely has brought some demand, and that’s about 5% of eth’s current price, or half of the $100 price gain eth saw just from yesterday to today.

This fork demand may rise for the next 12 days as we get closer to the upgrade and fork, and it may keep rising for one to two weeks after that.

As there are defi components, one could add another week because following the upgrade, there’s nothing left to see in eth, but all will see what runs and doesn’t run on ethW, and therefore on a fork of eth if there’s ever good reason to have one.

And so in November this fork demand should be gone. Any temporary new speculative demand regarding the Merge should be gone by then too, and so we’ll be left with almost only the new network demand.

Except not quite yet because miners will have to go through their eth savings first. Most of them might just stake them, but some, maybe 30%, maybe even higher, might just sell their $18 million daily reward to cover costs, lock profits, or get off to some other asset.

In bitcoin this process takes three to six months, in part because newly mined coins can not be spent for the first three months.

We haven’t been able to establish whether eth has an equivalent, but one can assume the $18 million keeps ‘running’ in practice for at least three months after September 14th. And so it’s only Christmas day when one can gain some confidence that finally it is just new demand operating.

Christmas day of the first bear year has always been a very good time to buy. It may well be this year too, although this year it clearly will be preceded by considerable developments.