- Ethereum revenue in September was about 4x larger than Solana's after the Fed rate cut.
- Ethereum annual inflation rate has risen to a two-year high of 0.74%.
- Ethereum has reclaimed the $2,395 support level and could rally to $2,595 if it crosses above the 100-day SMA.
Ethereum (ETH) is up over 3% on Friday as recent reports indicate its on-chain revenue growth in September amid the annual ETH inflation rate rising to a two-year high.
Ethereum's monthly revenue growth begins recovery despite growing issuance rate
Ethereum's revenue ticked up in September, exceeding that of Solana by over 3-4x, noted Swiss crypto bank Sygnum in a report on Thursday.
The top blockchain by total value locked (TVL) saw its revenue share decline steadily since the March Dencun upgrade, which "led to a degree of cannibalization of Ethereum by its Layer 2s."
Following declining on-chain activity after the market crash in August, Ethereum's revenue reached a multi-year low. DefiLlama's data shows revenue began rising again after the US Federal Reserve (Fed) cut rates by 50 basis points.
Ethereum Revenue (Source: DefiLlama)
If market activity continues to rise, Sygnum notes that L2s might benefit Ethereum in the long term.
"Although Layer 2 protocols can divert business away from the Ethereum blockchain, these cheap, scalable networks also enable activity that was not economically feasible previously. As they need to settle the final state on the main Ethereum chain, this is expected to lead to transaction and revenue growth in the long run," the bank concluded.
Ethereum co-founder Vitalik Buterin has previously expressed similar arguments, stating that the Layer 1 could make up for the fee reduction in volume through massive scalability over time.
However, in the short term, investors may be concerned as Ethereum's inflation rate has increased to 0.74%, per Binance Research's October 2024 Monthly Market Insights report. Binance analysts noted that ETH's issuance is at a two-year high as market share shift to L2s and low on-chain activity has reduced gas fees, which, in turn, have slowed down its burn rate.
ETH Supply/Daily Issuance (Source: Binance Research)
Meanwhile, Ethereum ETFs recorded outflows of $3.2 million on Thursday, according to data from Farside Investors.
Ethereum could rise to $2,595 after reclaiming key support level
Ethereum is trading around $2,430 on Friday, up 3% on the day. In the past 24 hours, ETH has seen $20.9 million in liquidations, with long and short liquidations accounting for $9.04 million and $11.86 million, respectively, per Coinglass data.
On the 4-hour chart, ETH has reclaimed the $2,395 level after finding support near a key descending trendline. Its price may have been defended by investors who had purchased 52.3 million ETH around the $2,316 to $2,385 region—its highest demand zone, per IntoTheBlock's data.
ETH/USDT 4-hour chart
ETH could rise to $2,595 if it continues the bullish move and crosses above its 100-day Simple Moving Average (SMA).
The Relative Strength Index (RSI) is approaching its neutral level, while the Stochastic Oscillator (Stoch) is trending towards the oversold region.
A daily candlestick close below $2,395 will invalidate the thesis.
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
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