Ethereum’s deflationary edge fades – Is an ETH/BTC breakout still possible?

Ethereum’s [ETH] deflationary edge over Bitcoin may be fading. Since the merge, 55.4% of the newly issued ETH has been burned. However, this number has dropped significantly to only 2.7% over the last thirty days. In addition, ETH’s yearly supply growth has increased to 0.86%, which is almost Bitcoin’s 0.82%. That’s a sharp pullback in ETH burning, impacting its scarcity argument and potentially challenging the long-term bullish thesis versus BTC. So, with ETH’s deflationary narrative being challenged, its next leg higher could increasingly rely on demand for Ethereum’s Layer 1 block space. As the chart below shows, gas prices have dropped from 2.76 Gwei to just 0.03 Gwei in two days, fueling the “Is ETH the new SOL?” debate.

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