The Weekly Wrap – ETH issuance, U.S. Fed tapering and other news

Nov 5, 2021 - 3 min read

1. ETH net issuance turns negative for the first time

The Facts:

  • Last week marked the first ever net negative issuance of ETH after the London EIP 1559 upgrade back in August.
  • The burned fees were higher than the issuance in the same time period, resulting in a net negative issuance.
  • This event leads to industry participants qualifying ETH as a potential deflationary asset.

Why it’s important:

  • This situation creates a contradiction; On one side, Ethereum as a smart contract platform needs cheap gas fees to run smoothly. On the other side, EIP 1559 leads to higher gas fees (in fiat terms), which runs counter the aim of becoming the universal world computer.
  • Will this step help Ethereum moving forward, with the growing list of competing smart contract chains that already today offer cheaper gas fees?

I’m going to take my next paycheck 100% in bitcoin…

2. U.S. Federal Reserve tapering to go into effect in November

The Facts:

  • The Federal Reserve announced Wednesday it soon will begin reducing the pace of its monthly bond purchases.
  • They will start with a net asset purchase reduction of $15bn per month. The intention is to get back to the preferred annual target inflation of 2%.
  • The Committee indicates that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust it if warranted by changes in the economic outlook.

Why it’s important:

  • It is expected that the Fed will raise interest rates once the exercise has concluded.
  • Is it realistic to have a complete reversal of a multi-year long accumulation of assets within half a year? Assuming that much of the funds have found their way into markets, leading to high prices in assets, real estate, etc. the question is open, what the consequences for the different markets will be in 2022.

Number of the week

Total Crypto Market Cap All-time high reached on Thursday

In other news

  • EA calls blockchain and NTFs the future of gaming. (via Cointelegraph)
  • Coinbase is testing a subscription service with a zero-fee model. (via The Block)
  • El Salvador to host Latin America Bitcoin Conference. (via Bitcoin Magazine)
  • MANA Token (Decentraland) surges after Facebook Metaverse announcement. (via. Barron’s)
  • Binance targets France as expansion plans worth $115 millions called “objective Moon” are being announced. (via. Cointelegraph)
  • Kleiman v Wright Trial started this week. (via. Fortune)

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