Bitcoin
Is Bitcoin Halving Behind Ethereum (ETH) Price Drop?
Ethereum price began trading at $2,928 on Monday, May 13, marking a 4% increase over the weekend, but recent ETH 2.0 staking trends suggest more downside ahead.
Ethereum surpasses 1 million node validators 1 year after Shappella upgrade.
Ethereum recorded another major milestone in May 2024 when the number of node validators staking coins on the network reached the 1 million mark.
Ethereum completed its transition from Proof of Work (PoW) to Proof of Stake (PoS) consensus with the Shappella upgrade running on April 12, 2023, allowing ETH holders to earn passive income and secure the network by staking their coins.
Since then, Ethereum 2.0 staking trends have been highly influential on ETH price action.
According to the latest data from Ethereum’s Beacon chain, there are now 1,015,570 node validators active as of May 13, 2024, who have jointly staked a total of 32.5 million staked ETH (~$96 billion).
The centralization of staking power among a few wealthy investors was one of the key risks identified ahead of Ethereum’s PoS transition in 2023. Consequently, Ethereum reaching the 1 million unique staker mark significantly alleviates these concerns, paving the way for nervous investors to commit to the long-term prospects of the ETH project.
However, in the short term, things may be a little different. A closer look at another critical metric shows that ETH has struggled to attract new participants since the Bitcoin halving.
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The chart below shows the number of stakers who enter the Ethereum validator queue on a given day, in contrast to those who leave and withdraw their staked ETH.
22,297 unique wallets that met the 32 ETH requirement joined the Ethereum staking network on April 16.
But, as described above, it has been in decline ever since. The latest data shows that just 704 unique addresses opted to join the Ethereum staking queue on May 12, reflecting a 98% decline from the local peak recorded on April 16.
The timing suggests that fears of a crypto market crash following Bitcoin’s April 20 halving have scared potential investors into reducing their ETH investments. Furthermore, since April 16, the price of ETH has succumbed to a 13% drop.
Without a doubt, Ethereum reaching 1 million validators is an important milestone for the future viability and decentralization of the network. But, this prolonged decline in the number of new participants could begin soon and have a negative impact on ETH’s short-term price action.
ETH Price Prediction: Support at Risk at $2,800
The price of Ethereum is trading around $2,960 at the time of writing on May 13. However, the 98% drop in new staking inflows puts the ETH price at risk of a collapse below the $2,900 level in the near term.
Looking at the lower-bound Bollinger band technical indicator, Ethereum bulls could mount a buy wall of initial support in the $2,847 territory.
But if this vital support level does not hold, a breakdown below $2,800 could be on the cards as predicted.
On the contrary, if market sentiment turns positive in the upcoming US CPI and PPI inflation reports, which are expected to be published this week, bulls could envision a recovery to $3,200. But still, the impending sell-off right at the $3,063 level represents a major hurdle in the short term.
Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to do thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.
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