Deflation and Cancun Escalation Push ETH to the Forefront

Trends and narratives

Deflation and Cancun push ETH to the forefront

Since the merger, 1.4 million ETH has been burned, resulting in a supply squeeze for ETH.

This has become more evident recently as on-chain activity has increased, with deflation reaching an annualized 1.095% over the past seven days.

Although Ethereum fees have surged again in recent weeks, this has not stopped on-chain metrics from rising. Despite being the largest DeFi network to date, Ethereum’s TVL has grown the second-largest percentage-wise among major chains over the past month (after Bitcoin).

Additionally, the Ethereum ecosystem may become more useful for retail users in the near future. The Dencun upgrade, which implements proto-danksharding, is scheduled to go live on March 13. This upgrade promises to reduce L2 transaction fees.

How to profit from it:

• Hold ETH and look for yield opportunities such as EigenLayer and the larger liquid staking ecosystem.

• Invest in ETH beta products such as L2. As Dencun makes L2 fees cheaper, this may drive more activity to these chains.

MEME Season:

Last Tuesday, Bitcoin surged from 52K to a high of 64K on Wednesday, giving BTC its highest monthly close in history.

Just as Bitcoin took a breather, traders skipped altcoin season and went straight to meme season.

If you held any memecoins on Solana over the past week, it was probably a good week.

What does the popularity of these memecoins mean? Historically, the soaring prices of tokens with no real use are often seen as a sign of a frothy and unsustainable market. Should we exit? Some people believe that memecoins are becoming an outlet for global speculative liquidity.

How to profit from it

This may just be the beginning, and the market will be very volatile in the future. Various opportunities will continue to emerge, competing for your attention, and attention may be the most scarce resource. Keep a clear head, develop an exit strategy and strictly adhere to it to protect your attention.

On-chain analysis

Solana Activity Rebounds to New Highs

DEX volume on Solana more than doubled this week, breaking December’s all-time high and surpassing Ethereum mainnet in a matter of days. The surge in activity could reignite the Solana narrative after losing momentum following its first network outage in nearly a year.

Stablecoin supply rebounds in Base

The number of stablecoins on Coinbase’s L2 Base platform has increased by 18% this week, which is a significant increase. Due to Coinbase’s large potential user base, Base is an emerging chain to watch.

Tracking ETF Inflows

Institutions are bidding. With every day that Bitcoin ETFs come out, more and more Bitcoin ETFs are being accumulated. The account HODL15Capital publishes data on these fund flows every day. Last week alone, more than 30,000 Bitcoin entered the ETF. So far, a total of more than 147,000 Bitcoin has entered the ETF.