Since the Ethereum Network moved from a Proof-of-Work algorithm to Proof-of-Stake nearly two months ago, Ether (ETH) has become deflationary for the first time.
The net issuance (or the annualized inflation rate) of the cryptocurrency, according to data from Ultrasound.money, has dropped to a 0.029% low. This indicates that the Ethereum network is now burning more Ether than it mints and that Ether is now deflationary.
However, since the deflationary status of Ether, critics have begun to attack the Ethereum foundation's removal of the cryptocurrency's staking withdrawal schedule, particularly on social media platforms like Twitter.
Since Ethereum merge, the reduction in its inflation rate indicates that Ether's net supply has decreased by 5,598.
According to calculations, if Ethereum had continued to use the PoW mechanism, Ether's supply would have increased by around 670,000.
Following the merge, Ether began its journey toward becoming a deflationary asset by replacing its miners with its validators.
As a result of the merge, Ether's annualized inflation rate also dropped from over 3.5% to almost zero.
The developers and influencers of the Ethereum network mentioned that the staking withdrawals on Ether might become available six months after the merge.
Soon after this, the schedule was pushed further to a year after the merge, then to 2023 – 2024 before being removed altogether.
Naturally, such a big move by the Ethereum foundation was faced with massive backlash on arrival.
Some of these complaints the Ethereum foundation has faced is of the absence of a due date for the network's users who invested based on the previously announced timeline.
The co-founder of ETHHub, Anthony Sassano, was quick to come to Ethereum's defense and waved off the whole issue as an attempt by Bitcoin maximalists to attack the network after being proven wrong by the success of the merge.
Over the past few weeks, Ether has been falling within a descending channel.
The failure of the bulls to raise the price above the track on 4 November may have prompted short-term traders to book profits.
When the price of the cryptocurrency hit the bottom of the channel on 10 November, buyers aggressively purchased the dip. However, the bullish momentum waned $1,372 (50-day SMA) and has been consolidated.
This may mean that the bears may be selling at greater levels. It also indicates that a retest of the lower support of this channel may be underway.
If the price retests this support and a breakout occur, the cryptocurrency will decline further downwards to the $1,000 zone.
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