THIS WEEK IN CRYPTO: ETHER’S DEFLATIONARY STREAK ENDS

Welcome back to another exciting edition of This Week in Crypto! Join us as we delve into the latest developments on the following topics:

1. Ether’s Deflationary Streak Ends: First Inflationary Period Since the Merge
2. $1.35 Billion in Bitcoin Options Expire: Bulls vs. Bears Showdown
3. Binance Receives Regulatory Approval for India Return

Ether’s Deflationary Streak Ends: First Inflationary Period Since the Merge

In a significant shift, Ethereum has experienced inflation for the first time since the merge, with the total supply of Eth increasing to 120.1 million on May 7. This marks a departure from the deflationary trend observed over the past year and a half following Ethereum’s transition to a proof-of-stake consensus model.

While the increase in Ethereum supply is relatively small, it represents a notable milestone for the Ethereum network. According to CryptoQuant data, the Dencun upgrade, rolled out on mainnet, played a role in this shift.

However, experts suggest that Ethereum’s temporary loss of its deflationary status is not a critical concern for the Ethereum ecosystem. Ki Young Ju, founder and CEO of Cryptoquant, emphasized Ethereum’s strength in decentralized applications (DApps), cautioning against comparisons with Bitcoin’s narrative of sound money.

The deflationary status of Eth was established after the Merge in September 2022, when a mechanism was introduced to permanently burn transaction fees, resulting in a decreasing Ethereum supply. Despite this recent inflationary period, Ethereum’s fundamentals remain robust, underpinned by its vibrant ecosystem of decentralized finance (DeFi) and non-fungible tokens (NFTs).

$1.35 Billion in Bitcoin Options Expire: Bulls vs. Bears Showdown

As Bitcoin options worth $1.35 billion approach expiry, market sentiment is divided on the potential impact on BTC price. While some traders attribute significant price movements to options expiries, others remain skeptical of their influence on Bitcoin’s trajectory.

The failure to sustain prices above $65,000 on May 6 has reignited discussions about the role of weekly options expiries in Bitcoin’s price action. However, a closer examination of derivatives metrics suggests a more nuanced outlook. Let’s dig deeper:

Despite the substantial open interest in Bitcoin options, data from Deribit indicates a balanced distribution between call (buy) and put (sell) options. While bears may have positioned themselves for a downside move, the overall market sentiment appears evenly matched, with no clear advantage for either bulls or bears.

As the expiry deadline approaches, market participants remain vigilant, but there are no indications of a significant price surprise. Bitcoin’s resilience in the face of options expiries underscores the maturity of its market and the growing sophistication of market participants.

Binance Receives Regulatory Approval for India Return

In a positive development for the cryptocurrency industry, Binance has secured approval from the Financial Intelligence Unit (FIU) to resume its operations in India. Following a notice of noncompliance in December 2023, Binance is now the second offshore exchange, after KuCoin, to receive regulatory clearance.

The approval comes after Binance reportedly paid a $2 million fine for noncompliance, signaling its commitment to regulatory compliance in India. The move is expected to bolster confidence among Indian crypto investors and pave the way for the exchange to regain its foothold in the market.

India’s crypto landscape has faced regulatory challenges, including hefty taxes and regulatory uncertainty. However, Binance’s return highlights the growing interest in crypto assets among Indian investors and the potential for further growth in the country’s digital asset market.