- Ethereum supply has risen to 120,501,906 and is currently approaching its highest level in almost two years.
- The number of validators on the network has also fallen by about 2% over the past three months.
Ethereums [ETH] has registered a significant increase in total supply, which is approaching the highest level in almost four years.
The rising supply is hampering Ethereum’s earnings potential as it has underperformed versus Bitcoin [BTC] and other top altcoins.
ETH supply is approaching a two-year high
Data from CryptoQuant shows that ETH supply currently stands at 120,501,906, which is the highest level since February 2023.
If this increase continues, it could soon reach pre-Ethereum merger levels.
Source: CryptoQuant
The Merge, an event that changed Ethereum from Proof-of-Work (PoW) to Proof-of-Stake (PoS), was intended to make ETH deflationary. It reduced ETH issuance from approximately 13,000 ETH per day to 1,700 ETH per day depending on staking activity.
However, Ultrasound money shows that the supply of ETH increased by 45,724 ETH in just thirty days. When supply rises amid weak demand, it can lead to bearish moves.
Dropping the number of validators suggests…
Ethereum’s PoS system relies on validators, who must pledge ETH as collateral to validate transactions.
However, over the past three months, the number of validators on the network has dropped by about 2% to 1,057,356.
Source: Validator Queue
This decline indicates that there is a sharp increase in activity, which is contributing to the rising supply. Per Validator Queue, the amount of ETH staked is currently equal to 27% of Ethereum’s circulating supply.
Declining activity on the Ethereum mainnet
In addition to weakened demand for ETH staking, reduced activity on the Ethereum mainnet could contribute to the rising supply. For every transaction on Ethereum, a base fee is paid in ETH, which is later burned.
This burning process is intended to make ETH deflationary. However, when there is less activity on the mainnet, fewer tokens are burned, increasing the supply.
Per L2Beat data, most activity has been diverted from the Ethereum mainnet to layer two networks. For example, the number of transactions on Base over 30 days is 312 million, which is almost ten times higher than Ethereum’s 36 million.
As more people rely on Ethereum layer two networks and not the mainnet, this could stifle the burning process, which will impact the amount of ETH removed from circulation.
ETH/BTC hits its lowest level since 2021
As Ethereum’s supply dynamics weigh on the price, Bitcoin continues to outperform the altcoin. ETH/BTC has fallen to 0.02996, making it the lowest level since March 2021.
Source: TradingView
Read Ethereum’s [ETH] Price forecast 2025–2026
ETH/BTC traded within a descending parallel channel on the weekly chart.
After the recent dip, it has broken the channel’s lower trendline, confirming that Ethereum was in a downtrend and could record new lows.
