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Macro analyst and former Goldman Sachs executive Raoul Pal says Ethereum (ETH) has one of the best trading setups he’s ever seen.
In a new interview, Pal said that ETH is shaping up to be the “biggest trade” as changes in Ethereum’s fundamentals dramatically reduce the available supply of the second cryptocurrency.
“I published Global Macro Investor last Monday or Monday, there was an article buried there, it was about six pages long and it was called ‘The Greatest Trade’, and it’s just Ethereum. [there’s] a better configuration in Ethereum … than March 2020 was for Bitcoin …
Basically, there is 13% of all Ethereum free float available. Everything else is staked, locked and hoarded. They just made the supply more difficult. The supply is less. Ethereum which is free floating is falling every day. And now we just removed token 1559. Most people will start to stake the [ETH] they hold, and there is no [ETH] available and the demand is exponential. An exponential demand meets a fixed supply equals an exponential increase in prices. One of the best setups I have ever seen.
Pal is referring to the recently released EIP-1159 update, which introduces a mechanism for charging fees to the Ethereum network. With the upgrade, a certain percentage of the fee is burned or removed from the system each time a transaction is processed.
More than 11,982 ETH, worth $ 37 million, have been burned at the time of writing.
Right after EIP-1159 went live, prominent crypto trader Lark Davis told his 437,500 Twitter followers that he expected the daily supply of Ethereum to be. to cut half.
“EIP 1559 went online today. Over 3,000 ETH were burned. Putting us on the right track to burn [6,000] To [7,000] ETH within the first 24 hours.
12,000 ETH will be mined today. This is about a 50% reduction in the supply flow, and we are still awaiting the upgrade of the main portfolios. “
Davis is also considering another imminent Ethereum update which he believes may have a significant impact on ETH’s supply. The trader highlights the upcoming merger between the Ethereum mainnet and the beacon chain, which will mark the protocol shift from Proof of Work to Proof of Stake.
Lark says the update can significantly reduce daily ETH emissions.
“Ethereum, as part of the proof-of-work to proof-of-stake merger, is going to experience a 90% reduction in daily emissions. Basically, we’re going to go from 12,800 Ethereum block rewards each day to around 1,280. Ethereum per day, which essentially reduces the annual inflation rate from about 4.3% to 0.43% .That’s a reduction of 90%.
The update, which is expected to take place this year, will enable ETH staking and signal the end of mining activities in the Ethereum network.
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Disclaimer: Opinions expressed on The Daily Hodl do not constitute investment advice. Investors should do their due diligence before making high risk investments in Bitcoin, cryptocurrency, or digital assets. Please note that your transfers and transactions are at your own risk and that any loss you may suffer is your responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in Affiliate Marketing.
Featured Image: Shutterstock / Titima Ongkantong
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