Ether Burns Over $275 Million Worth of Tokens in May, Driving Deflationary Trend

May has been a relatively quiet month for Ether trading, with the cryptocurrency experiencing a minor decline of only 0.3%. In contrast, Bitcoin faced a significant decrease of nearly 7%.

Bitcoin is on track to record its first monthly loss since December, largely due to the increased likelihood of the US central bank maintaining high interest rates. This situation has driven up the value of the US dollar and caused a downturn in the cryptocurrency market.

Experts believe that the market needs new momentum to drive prices higher and overcome the current slump.

During this month, more than 143,830 Ether, worth approximately $275 million, were burned, according to data from ultrasound.money.

Source: ultrasound.money

Ether is currently in a phase of decreasing inflation, with the supply growth rate decreasing by 1.46% per year. It is projected that approximately 2,441,000 Ether will be burned this year, equivalent to a value of around $4.5 billion.

On the other hand, if Ethereum continues to operate as a Proof of Work protocol, it will follow a path of 2% supply growth.

The Growth Rate of ETH’s Supply on the Rise | Sourse: ultrasound.money

Data shows that due to Ethereum’s deflationary stance, Ether and Bitcoin are breaking their correlation.

The positive correlation between these two digital assets has weakened this year, indicating a long-term market shift where they operate independently due to differing supply-demand economics.

“What we are witnessing may be the beginning of a long-term regime change. As Ethereum has transitioned from PoW to PoS, the economic nature of supply and demand is the basis for the two tokens continuing to diverge,” commented Pulkit Goyal, Vice President of Trading at OrBit Markets.

According to CryptoQuant data, over 13% of the total existing Ether has been staked, leading to the lowest-ever balance of Ether on exchanges.

Ether has seen a 2.8% increase over the past week, while Bitcoin has lagged behind, with only a 2% increase during the same period.

As the cryptocurrency market continues to evolve, investors and analysts closely watch the developments in both Ether and Bitcoin, looking for signs of market recovery and potential long-term shifts in their dynamics.

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