ethereum price surpassed the $2,500 milestone on February 9, but the growing number of eth coins deposited in staking contracts could boost it further.
ethereum price took another giant leap on February 9 when it crossed the elusive $2,500 territory to take its weekly gains to 13%. Rising deposits at stake, positive market sentiment surrounding the Dencun upgrade, and potential spot ETF approval have emerged as dominant bullish catalysts for eth price in recent weeks.
Will the bulls be able to ride this momentum to reclaim $3,000 for the first time in the ethereum 2.0 proof-of-stake (PoS) era?
ethereum staking deposits hit 25% milestone
ethereum developers thrown out the upgrade of Dencun on the Sepolia testnet at the end of January, amid a positive reaction from market participants.
With the promise of improving transaction processing capacity and reducing costs, the Dencun upgrade may attract more developers and users to the ethereum DeFi ecosystem. This increased utility and adoption could drive demand for eth and ultimately increase its price.
In particular, investors have increased the rush of betting on the ETH2.0 beacon chain, possibly in a bid to pre-empt expected gains from the network's recent upgrade and potential spot ETF approval.
ethereum staking deposits have increased since the Shappela upgrade allowed withdrawals in April, and the recent successful Dencun upgrade appears to have further boosted stakeholder conviction.
Investors have deposited another 588,866 eth into ethereum 2.0 staking contracts, since the Dencun testnet launch was announced on January 31.
According to official data from the Beacon chain, 29.8 million eth are now locked in staking contracts on the ethereum beacon chain. Notably, this is equivalent to 24.7% of the total circulating supply of ethereum.
<img decoding="async" width="2738" height="876" src="https://crypto.news/app/uploads/2024/02/Screen-Shot-2024-02-09-at-6.06.18-PM.png” alt=”ethereum (eth) Staking Balances vs. Active Validators”/>
In simple terms, network validators now deposit a quarter of the total eth coins in circulation into ETH2.0 staking contracts on the beacon chain. This milestone is bullish for two main reasons.
Firstly, increased participation is crucial for any PoS blockchain as it improves the security architecture of the network. More importantly, it reduces the number of currencies available for trading in spot foreign exchange markets.
Currently, eth participants earn a 4% annualized reward rate. This passive income incentive structure and positive market sentiment could encourage even more staking deposits in the coming days.
Given the prevailing bullish sentiment surrounding cryptocurrency markets, all of these factors could combine to push the price of eth towards the $3,000 mark in the coming weeks.
eth Price Prediction: Possible Hurdle at $2,600?
From the on-chain metrics discussed above, market tightness induced by increasing staking deposits has put eth prices in an uptrend. But in terms of short-term price objectives, bullish traders face a major hurdle in the $2,600 area.
IntoTheBlock's Global In/Money Out (GIOM) data groups all existing eth holders based on their historical purchase prices. Currently, it represents 1.3 million addresses that acquired 193,130 eth at the maximum price of $2,555.
This group of holders could present initial resistance if they choose to book some profits as Etherum prices break even.
However, if the bulls can achieve a decisive break above that initial resistance level, a rally towards $3,000 could be on the cards.
On the other hand, bears could overturn this optimistic prediction if ethereum price falls below $2,000. However, as seen above, the 3.2 million addresses acquired 3.4 million eth at a minimum price of $2,259.
To avoid falling into losing positions, such investors might engage in frantic hedge buying, which could inadvertently trigger a rally.
