As the merge approaches, on-chain data suggests ETH used as store of value

According to on-chain data, the dominant behavior across the Ethereum network will be HODL as the merge approaches. The coin held by an Ethereum investor is maturing and the number of his HODLers unwilling to sell is increasing.

Within the Ethereum ecosystem, just under 60% of investors have held for more than a year, while in Bitcoin 80% of HODLers have held for the same period.

However, now the number of Ethereum 7-year holders (in dark blue) is starting to increase. From July 28th, the first of his 7-year holders started showing up and now holds over 2% of his supply.

Given that Ethereum mined its first block in July 2015, a coin that hasn’t moved in seven years could be the genesis coin that never moved. As time goes on, his HODLer in 2017 bull market will start to emerge as he entered the Ethereum ecosystem, so we expect his HODLer over 7 years to continue to grow.

Unlike Bitcoin, Ethereum is not often called a store of value. However, according to on-chain data, his 2% of Ethereum holders believe that could be the case. Depending on network activity, Ethereum could also deflate after the merge, adding credence to this theory.

to bitcoin inflation rate Ethereum’s deflation, on the other hand, is 4%, nearly 6% lower than Bitcoin. Still, Ethereum has strong utility across its network, so a lack of available ETH due to investor holdings can impact network performance.

Inflation is a tool designed to encourage spending. If Ethereum goes into deflation, there will be little incentive to trade on the network.

Additionally, there were approximately 32 million ETH on exchanges in mid-2020. However, two years later, the amount of ETH has dropped to just 20 million. Long-term HODLer numbers, inflation rates, and exchange supply are important long-term trends necessary to understand supply and demand dynamics.