ETH’s EIP-1559 burn mechanism was introduced with the London upgrade in 2021. This system permanently removes a portion of every transaction fee from circulation, effectively making ETH deflationary.
The more activity on the Ethereum network, the more ETH is burned, creating a scenario where more ETH is destroyed than minted. Since the upgrade, 4.6 million ETH, worth about $13 billion, has already been burned. After the implementation of EIP-1559, the new ETH issuance dropped by 88%.
The reduced circulating supply through ETH staking as a validator decreases the liquid supply on the market, creating upward price pressure. From May 2025 to now, Ethereum has been fully deflationary every single day, meaning more ETH is destroyed than issued.
However, Ethereum remains strong, sustaining its HTF uptrend and consistently forming Higher Lows and Higher Highs on the daily chart. This divergence is crucial because it shows Ethereum is building strength even as Bitcoin struggles.
The ETH/BTC pair reinforces this narrative. Just 17 days ago, Ethereum reclaimed a 944-day downtrend that had represented -75% of underperformance relative to Bitcoin. Reclaiming this trend is a strong indicator that ETH is regaining dominance in the crypto market.
