Why Ethereum’s Price Keeps Rising — Even with Infinite Supply
In the world of cryptocurrencies, supply dynamics are often compared with traditional economics. The idea that scarcity drives value makes intuitive sense — after all, Bitcoin’s capped supply of 21 million is often cited as a key reason behind its long-term bullish narrative. But Ethereum? It technically has an infinite supply, yet its price continues to rise.
So what gives?
Let’s break it down.
🔍 Infinite Supply, But Not Infinite Circulation
Ethereum does not have a maximum supply like Bitcoin. This has often raised eyebrows among investors who assume an ever-expanding supply should suppress price. However, Ethereum’s monetary policy is far more dynamic than it first appears.
The network’s shift to Proof of Stake (PoS) through the Ethereum 2.0 upgrade drastically altered supply-side economics. One major change was the EIP-1559 proposal, which introduced a base fee burn mechanism. Every transaction now destroys a portion of ETH, reducing overall net issuance.
In some instances, Ethereum has even gone deflationary, meaning more ETH is being burned than minted.
💡 Why Price Still Increases
There are a few core reasons Ethereum’s price can continue to increase even without a hard cap:
1. Deflation Through Activity
With the introduction of EIP-1559, high network usage leads to more ETH being burned. When there’s demand for block space (DeFi, NFTs, memecoins), the burn rate accelerates — effectively decreasing the circulating supply.
2. Staking Lockup
Under PoS, validators stake ETH to secure the network. This staked ETH is locked and removed from circulation, reducing selling pressure. As of now, millions of ETH are staked — out of reach for trading or liquidation.
3. Utility Drives Demand
Ethereum isn’t just a coin; it’s a platform. DeFi apps, smart contracts, NFTs, and token launches all run on Ethereum. This utility layer keeps ETH in constant demand — not just as a currency, but as fuel for a massive decentralized ecosystem.
4. Strong Developer Activity
Ethereum remains the most actively developed blockchain. This continued innovation adds long-term confidence and value, attracting new users and institutional interest.
📊 Visual Breakdown
🧠 Final Thoughts
Ethereum’s value doesn’t rely on scarcity alone — it’s a complex interplay of burn mechanisms, staking incentives, and network utility. While it has no hard cap, it does have economic pressure valves that help balance supply and demand.
In a sense, Ethereum’s “infinite” supply is functionally constrained, and that’s more than enough for price appreciation — especially as global adoption grows.
