The arrival of Bitcoin halving and spot BTC ETF speculation captured investors' imaginations, while Ethereum has its first inflationary month since transitioning to Proof of Stake.
The value of ETH is now a 15-month low against Bitcoin, despite speculation that regulatory authorities may soon greenlight a spot BTC ETF and anticipation for next year's Bitcoin halving. The monthly ETH issuance has outpaced ETH burned for the first time since The Merge.
TradingView reported that ETH last traded hands for 0.0575 BTC, with daily price action trending at its lowest level since last July. Since early January, Ether has been down 26.3% compared to Bitcoin.
In the late part of 2022, Ether captured investors' interest, with The Merge promising to transition the network to proof of Stake and realize a deflationary Ethereum.
While The Merge reduced new Ethereum issuance by around 90%, a recent drop in on-chain activity culminated in Ethereum's first inflationary month since last December. Over the last 30 days, more than 30,100 ETH entered supply, according to Ultra Sound Money.
The exchange's supply is down by approximately 272,000 ETH since The Merge's release, but the exchange has said it is down by about 272,000 ETH. The upgrade also reduced energy consumption by more than 99.9% by booting proof of work miners from the network.
While the transaction volume, burn rate, and fees on the Ethereum mainnet are declining, Ethereum's layer 2 ecosystem is thriving.
Combined throughput on L2 overtook the Ethereum mainnet 12 months ago, with the two metrics trending competitively until Layer 2 activity shot up with the launch of ZkSync Era and Polygon ZkEVM in March. Linea and Mantle also launched in July, while Coinbase deployed Base in August.
While L2s received a 20 percent throughput lead over the mainnet in early February, layer 2s are now processing more than 5.5 times more transactions than the mainnet, according to L2beat.
ZkSync Era is giving the Ethereum mainnet a close run by monthly throughput, with 29.6M and 30.2M transactions respectively. Base closely follows 28.6M.
The Ethereum network has faced new challenges as a result of the Merge, with liquid staking tokens threatening to centralize the supply of staked Ether. LSTs are yield-bearing tokens that offer holders access to Ethereum staking yields.
Lido, the top LST provider, controls one-third of all staked Ether, meaning that 7% of ETH's supply has been converted to Lido's stETH token, according to Glassnode. The Lido platform is also earning 0.5% of newly minted ETH.
Lido's dominance is rising, even though prominent community members are calling on it to use economic disincentives like raising fees to drive down adoption. Vitalik Buterin, Ethereum's chief scientist, urged staking providers to increase their bids for a staked Ether dominance of no more than 15%.
While Ethereum is still in its post-merge phase, Bitcoiners are expecting bullish news on the horizon.
The halving is a four-year event that reduces the issuance of new BTC by 50% that has historically been followed by bullish market cycles.
While the Ethereum community is gearing up for its anticipated Dencun upgrade, the technicality of calldata compression and layer 2 scaling has hindered Dencun from becoming a mainstream narrative.
Also, Bitcoin investors anticipate that the U.S. Securities and Exchange Commission will soon approve a spot Bitcoin exchange-traded fund. BlackRock, the world's largest asset manager, filed for a spot BTC ETF in June, prompting a wave of copycat applications.
On Sept. 9, Eric Balchunas, a senior ETF analyst at Bloomberg, tweeted that he expects a spot Bitcoin ETF to receive regulatory approval by the end of the year, citing dialogue between the SEC and potential issuers.
Ark Invest and 21Shares also filed applications for spot-ether ETFs last month.