Ethereum

Merge

Bitcoin

April

<h2 id="quick-take">Quick Take</h2>
Bitcoin’s inflation rate, currently sitting at about 1.750%, is expected to reduce by half to approximately 0.875% upon the next halving in April 2024. The upcoming reduction in Bitcoin’s annual increase of supply created an interesting point of comparison with Ethereum, which experienced significant changes in its own rate after transitioning to Proof-of-Stake (PoS) last year.
<figure id="attachment_371791" aria-describedby="caption-attachment-371791" style="width: 100%" class="wp-caption aligncenter">
 <figcaption id="caption-attachment-371791" class="wp-caption-text">
 Graph showing Bitcoin’s inflation rate from January 2010 to November 2023 (Source: Glassnode)
 </figcaption>
</figure>
Following the introduction of the<a href="https://cryptoslate.com/over-1-billion-worth-of-ethereum-eth-now-burned-after-eip-1559-update/" rel="noopener noreferrer nofollow"> London Hard Fork</a> and the Ethereum Improvement Proposal (EIP-1559) in August 2021, a transaction base fee was established and burned, effectively reducing the ETH supply. This burn mechanism has destroyed an estimated 4.4 million ETH thus far, exerting deflationary pressure on Ethereum.
<figure id="attachment_371788" aria-describedby="caption-attachment-371788" style="width: 100%" class="wp-caption aligncenter"><img class="wp-image-371788 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/11/burn.png" alt="Ethereum Burned Supply: (Source: Glassnode)" width="1800" height="1013" srcset="https://cryptoslate.com/wp-content/uploads/2023/11/burn.png 1800w, https://cryptoslate.com/wp-content/uploads/2023/11/burn-300x169.png 300w, https://cryptoslate.com/wp-content/uploads/2023/11/burn-1024x576.png 1024w, https://cryptoslate.com/wp-content/uploads/2023/11/burn-768x432.png 768w, https://cryptoslate.com/wp-content/uploads/2023/11/burn-1536x864.png 1536w" sizes="(max-width: 1800px) 100vw, 1800px">
 <figcaption id="caption-attachment-371788" class="wp-caption-text">
 Graph showing Ethereum’s burned supply from September 2021 to November 2023 (Source: Glassnode)
 </figcaption>
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Since the burn mechanism was introduced 823 days ago, the annual increase in Ethereum’s supply has been around 1.158%. This was projected to continue following the Merge, a significant update that transitioned Ethereum from a Proof-of-Work (PoW) to a PoS consensus mechanism in September 2022.
<figure id="attachment_371786" aria-describedby="caption-attachment-371786" style="width: 100%" class="wp-caption aligncenter"><img class="wp-image-371786 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/11/ETH-1.png" alt="Ethereum vs Bitcoin inflation rate: (Source: ultrasound.money)" width="700" height="369" srcset="https://cryptoslate.com/wp-content/uploads/2023/11/ETH-1.png 700w, https://cryptoslate.com/wp-content/uploads/2023/11/ETH-1-300x158.png 300w" sizes="(max-width: 700px) 100vw, 700px">
 <figcaption id="caption-attachment-371786" class="wp-caption-text">
 Graph comparing the current inflation rate for Bitcoin and Ethereum&nbsp; (Source: <a href="https://ultrasound.money/" rel="noopener noreferrer nofollow">ultrasound.money</a>)
 </figcaption>
</figure>
Following the Merge, Ethereum has registered a negative inflation rate of -0.185%, significantly lower than Bitcoin’s. Under the previous Proof-of-Work (PoW)mechanism, Ethereum’s inflation rate would have stood at around 3.196%.
<figure id="attachment_371793" aria-describedby="caption-attachment-371793" style="width: 100%" class="wp-caption aligncenter"><img class="wp-image-371793 size-full" src="https://cryptoslate.com/wp-content/uploads/2023/11/merge.png" alt="Since Merge, Bitcoin and Ethereum inflation rate: (Source: ultrasound.money)" width="705" height="367" srcset="https://cryptoslate.com/wp-content/uploads/2023/11/merge.png 705w, https://cryptoslate.com/wp-content/uploads/2023/11/merge-300x156.png 300w" sizes="(max-width: 705px) 100vw, 705px">
 <figcaption id="caption-attachment-371793" class="wp-caption-text">
 Graph showing the inflation rate for Bitcoin and Ethereum since the Merge in September 2022 (Source: <a href="https://ultrasound.money/" rel="noopener noreferrer nofollow">ultrasound.money</a>)
 </figcaption>
</figure>
However, if Ethereum maintains its current supply growth until April 2024, Bitcoin could exhibit a lower inflation rate following its halving.
The post <a rel="noopener noreferrer nofollow" href="https://cryptoslate.com/insights/upcoming-bitcoin-halving-may-put-ethereums-inflation-rate-in-the-shadow/">Upcoming Bitcoin halving may put Ethereum’s inflation rate in the shadow</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://cryptoslate.com">CryptoSlate</a>.

Upcoming Bitcoin halving may put Ethereum’s inflation rate in the shadow

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