Bitcoin hits $70,000, its second all-time high this week!
Effect of PoS Switch on the Tokenomics of Ether and more...
1. Bitcoin (BTC) reached a new record high of $70,000 on Coinbase, but later dropped to under $67,000 before rebounding to over $68,000. This marked the second all-time high and subsequent correction for the leading cryptocurrency within the week.
2. Bitcoin's surge in price has been attributed to significant inflows into spot bitcoin ETFs, particularly following the approval of 11 such funds by the SEC in January. This influx of institutional investment reflects a growing trend towards greater institutionalization within the crypto market.
3. Investors are anticipating an upcoming halving event for Bitcoin, which historically has led to a rise in its price. This anticipation, combined with increased institutional involvement, has contributed to the ongoing rally in Bitcoin's price.
4. Analysts at Deutsche Bank predict that as the Federal Reserve begins cutting interest rates, risk appetite will increase among investors. This could lead to a shift towards higher-yielding alternative assets such as cryptocurrencies, further supporting the upward momentum in digital currency prices.
5. Ethereum (ETH), the second-largest cryptocurrency by market cap, also experienced a notable increase in price, coming close to the $4,000 mark before retracing. This indicates a broader trend of positive momentum across the cryptocurrency market, beyond just Bitcoin.
Proof of Stake cut 5.5M ETH from circulation
1. Since Ethereum's transition to Proof-of-Stake (PoS) in September 2022, the network has seen a reduction of 417,413 ETH in supply, resulting in a net decrease due to burning and issuance of new ETH.
2. Ethereum's deflationary monetary policy contrasts with Bitcoin's fixed issuance schedule, with Ethereum experiencing a negative annual inflation rate of -0.23% compared to Bitcoin's 1.716% growth over the same period.
3. A simulation suggests that under a Proof-of-Work (PoW) model, Ethereum's supply would have increased significantly more, highlighting the deflationary impact of the PoS consensus mechanism and the burn mechanism introduced in EIP-1559.
4. Ethereum's total circulating supply currently stands at 120,103,624 ETH, showcasing the deflationary trend desired by the Ethereum community, aiming to make ETH a deflationary asset over time.
5. While Ethereum's transition to PoS has led to reduced supply growth, critics express concerns about centralization of control and security risks, contrasting with Bitcoin's more decentralized mining network. Observers monitor how the supply dynamics and security trade-offs of both networks unfold, especially with Bitcoin's upcoming halving and Ethereum's evolving PoS regime.