Ethereum staking has seen a remarkable increase post the Shanghai upgrade on April 12th, outpacing withdrawals and raising some interesting questions about Ethereum’s prospects in the near future. With ETH staking deposits on the Beacon Chain reaching an all-time high of 24.17 million ETH, valued at $46.03 billion as of June 3, the upgrade seems to have triggered an influx of new deposits, totaling approximately 6 million ETH. In contrast, total withdrawals over the same period stand at a mere 3 million.
One of the primary consequences of this increase in Ethereum staking is a sharp reduction in the overall supply of Ethereum tokens available in the market. As per data from CryptoQuant, Ethereum (ETH) balance on crypto exchanges has plummeted to a new five-year low. The total amount of ETH held by exchanges has dropped to nearly 16 million, the lowest it’s been since July 2018, representing a 50% decline from its all-time peak.
When considering the rise in ETH locked alongside the increase in staking, it’s clear that the trend is pulling Ethereum tokens further out of circulation. The ETH locked currently stands at an all-time high of 22.4 million, which includes ETH staked on the Beacon Chain, ETH deposited to the Beacon contract but not yet validating, and rewards on the Beacon chain.
Naturally, enthusiasts might speculate about the potential ramifications of a dwindling supply of Ethereum tokens. A decrease in available ETH tokens could put upward pressure on its price. Ethereum Realized Price is now at a 6-month high of $1470, which might be interpreted as on-chain support for ETH’s price. It also means that there is a lower probability of the price dropping below this level, which could make institutional investors more inclined to invest in Ethereum than in Bitcoin.
The increased demand coupled with a reduction in supply bolsters several bullish predictions about Ethereum’s future performance. According to CoinGape Markets, the ETH price could reach $2500, based on the bullish morning star candlestick pattern formed post its breakout above the 2-month resistance trendline. Additionally, a bullish wedge pattern breakout appears to have set Ethereum on a recovery path.
The current trading price for Ethereum is above $1900, registering a 5% upside in just a week. The limited supply and growing demand suggest that investors are buying on dips, perhaps in anticipation of a significant rally in ETH prices. While the enthusiasm around Ethereum’s future might be justified, it’s essential for investors to perform thorough market research before placing bets on the cryptocurrency’s trajectory. Responsibility for financial loss lies with investors, and as with any market situation, it’s crucial to stay informed and proceed with caution.
Source: Coingape
