Available reports show that the Ethereum network has removed nearly 70,000 ETH from circulation since the last major update, the Merge. That update saw Ethereum transition from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) algorithm. This development has reduced the selling pressure on ETH, the second-largest cryptocurrency by market capitalization.
In the crypto industry, reducing the number of circulating tokens is considered a bullish signal for any asset. It is an idea consistent with the economic principle of demand and supply, where a reduction in supply creates scarcity, which by extension, results in an increase in the demand and value of an asset.
According to a renowned cryptocurrency analyst popularly known on Twitter as Pentoshi, the shrinking supply of ETH is one of the forces behind the crypto’s current price rally. He believes this force could remain intact and push Ethereum to $2,000 soon.
$Eth / USD— Pentoshi 🐧 (@Pentosh1) March 29, 2023
Currently sitting above prev range highs after a retest yesterday and above 21' lows
Above this area = bullish
Below = invalidated.
I def feel it has a shot to push up to 2k. Binance fud was a great chance to push lower and it failed pic.twitter.com/HeTGTuWzwB
In a tweet, Pentoshi suggested that Ethereum may have already embarked on the rally to $2,000, considering recent price behavior. He noted that ETH is currently sitting above the previous range high, and sustaining this position would signify a bullish trend. However, if the price drops below it, the bullish trend will become invalidated.
The analyst expressed confidence in the continued bullish trend, noting his belief that ETH would reach $2,000 soon. He supported his claim by acknowledging the failure of the recent Binance FUD (Fear Uncertainty and Doubt) to push the ETH price lower as a bullish momentum behind the current rally.
The Binance FUD resulted from a bug that affected one of its engines, leading to the suspension of some critical services. The issue was arrested quickly, and the exchange reassured users of the safety of their assets.
Ethereum traded at $1,814 at the time of writing, having gained 5.14% in the last 24 hours.