Over $3.4 billion Lost: Ethereum Burn and Bugs Cut 5% of Supply

- Ethereum deflation leads to $3.4 billion in permanent losses while whale activity boosts price rally. - ETH surges toward $4,000 as institutional inflows and regulatory clarity strengthen momentum. On July 21, 2025, Cryptopolitan reported that Ethereum's circulating supply has significantly contracted as burning and permanent losses have removed over 5%, or more than 6 million ETH, from circulation. This deflationary shift, combined with growing demand from whales and institutional investors, is fueling Ethereum’s bullish momentum toward the $4,000 price mark. The report detailed that user errors, bugs, and other mishaps caused the permanent loss of 913,111 ETH, valued at over $3.4 billion, which marks a 44% increase since March 2023. In addition, Ethereum’s EIP-1559 mechanism has burned 5.3 million ETH as transaction fees, further enhancing the network’s deflationary model. Together, these losses and burns have tightened the market supply by over 6 million ETH, significantly impacting Ethereum’s supply-demand dynamics. Several factors are fueling Ethereum's recent price rally. For instance, large Ethereum holders, or whales, purchased more than $2.7 billion worth of the cryptocurrency within just one week. One notable transaction involved a single whale acquiring $49.56 million in ETH, signaling robust confidence in Ethereum’s value trajectory. Institutional demand has also intensified, as for consecutive days, spot Ethereum ETFs reported higher inflows than Bitcoin. This trend underscores a growing institutional preference for Ethereum as a major asset class. Favorable regulatory developments are also adding to the bullish sentiment. On July 18, 2025, the GENIUS Act became law and introduced a comprehensive framework for stablecoin regulation, which many view as a positive development for Ethereum and other blockchains that support decentralized finance (DeFi) ecosystems. Reflecting expanding investor confidence, Ethereum’s market influence continues to grow, with its dominance rising from 9.7% to 11.6%. Analysts believe that Ethereum’s deflationary supply and heightened institutional demand could propel ETH past the $4,000 resistance level and set new financial milestones. As of July 21, 16:16 UTC, Ethereum (ETH) was trading at $3,782.50, with a 0.22% change in 24-hour trading volume, according to the latest market data.