Ethereum News Today: Ethereum's 5% supply reduction from 6 mln ETH burned/lost fuels $4K push as price tests $3,800 resistance

Over 6 million ether (ETH) has been permanently removed from circulation through burn mechanisms and lost keys, creating a shrinking supply environment for Ethereum as the cryptocurrency tests key resistance levels near $3,800. Validator exits have surged to 694,106 ETH, signaling a net staking outflow of 473,151 ETH, while open interest on exchanges like Binance climbed to $15 billion, reflecting heightened speculative activity [1]. These developments have sparked debates about whether Ethereum’s dwindling float could drive the price toward $4,000, a threshold many analysts view as a critical inflection point.

Technically, Ethereum’s 1D chart shows the asset retesting the $3,800 resistance zone, a level that previously triggered an 8.5% drop to $3,531. However, the recent pullback did not trigger panic selling or forced liquidations, indicating investor confidence remains intact [1]. This resilience is attributed to a broader market rotation rather than isolated weakness in ETH. Bitcoin dominance (BTC.D) rebounded 2.5% from a 60.43% local low, pushing the ETH/BTC ratio into a downtrend and compressing ETH.D to 11.30%. Analysts note that sustained BTC.D strength could reignite capital outflows from ETH, testing its relative strength [1].

Supply-side dynamics further complicate the outlook. Smart contract audits reveal 913,000 ETH—worth $3.43 billion—is permanently inaccessible due to multi-sig freezes, contract bugs, and typo errors. Combined with 5.3 million ETH burned via EIP-1559, over 6 million ETH, or more than 5% of total issuance, has effectively vanished from the float [1]. This scarcity narrative is amplified by rising validator exits and a 12-day exit queue, which narrow the supply available for futures and margin trading. With open interest hitting $50 billion, the market is increasingly sensitive to shifts in dominance and liquidity [1].

The interplay of these factors raises questions about Ethereum’s trajectory. A breakout above $3,800 could reframe the resistance as support, positioning the asset for a bullish expansion toward cycle highs. However, a resurgence in BTC.D or renewed capital rotation might force ETH deeper into correction territory. The key variable remains whether demand for ETH stabilizes amid thinning liquidity.

Sources indicate that Ethereum’s supply constraints are a structural trend rather than a short-term fluctuation. While $4,000 remains speculative, the combination of burned tokens, lost keys, and staking outflows creates a tailwind for price discovery. Market participants will closely watch validator behavior and open interest metrics to gauge whether the current equilibrium holds or shifts toward a scarcity-driven rally [1].

Source: [1] [6 mln ETH gone forever: Will shrinking supply fuel Ethereum’s $4K run?] [https://ambcrypto.com/6-mln-eth-gone-forever-will-shrinking-supply-fuel-ethereums-4k-run/]