After the successful Shanghai update, Ethereum appreciated significantly and reached $2150.
However, a month later, the coin has fallen in price by 14%. However, onchain indicators suggest that strategic investors may start to make bullish bets on ETH
ETH is a native Ethereum blockchain token co-founded by crypto industry heavyweight Vitalik Buterin.
In the fall of 2022, the entire project migrated from the energy-consuming consensus Proof-of-Work (PoW) mechanism to the algorithm Proof-of-Stake (PoS), which was a significant milestone in Ethereum history.
Further, in April 2023, the network successfully underwent a update Shapella.
The upgrade implemented the EIP-4895 offer, which allowed investors to withdraw from the Beacon Chain placed on stacking ETH.
In the course of the upgrade, the offer EIP-4895 was implemented, which allowed investors to withdraw from the Beacon Chain placed on stacking ETH.
Ethereum stocks on exchanges have fallen to historic lows
A month after the update, Ethereum appears to be dispelling bearish fears of potential threats to withdraw coins from the stacking.
This happens against the background of the fact that investors began to withdraw coins from exchanges, and the size of deposits on the Staking updated a record high.
Perhaps this is how investors are preparing for a new ETH rally.
According to analyst platform Santiment, the volume of Ethereum stocks on exchanges is now at its lowest levels since July 2015, since the cryptocurrency began public trading.
This indicator measures the number of ETH coins currently stored in exchange wallets.
The yellow color on the chart shows a sharp decline in this indicator since May 1.
Investors withdrew about 550 thousand ETH coins from trading floors from May 1 to 15. As a result, ETH stock on exchanges reached a historical low of 12.4 million on May 11.
Ethereum (ETH) stocks on exchanges.
Such withdrawal of tokens from the supply available on trading floors increases the scarcity of the coin and could potentially cause its value to rise.
It’s better to steak than to sell
In the meantime, the number of coins placed on Ethereum’s stack belies recent fears that investors will start withdrawing their coins en masse from the stack after the update and triggering a massive ETH dump.
As Glassnode’s statistics show, most ETH 2.0 investors prefer to place their tokens on staking in various DeFi protocols and make money from that instead of just selling them.
Accordingly, the increase in the number of coins on the stack causes a reduction in the volume of supply on exchanges, which can also support the growth of the price of the asset.
From April 13 to May 15, investors placed an additional 2.15 million ETH (about 1.76% of the total coins in circulation) on stacking in smart contracts. At current prices, this amounts to about $3.9 billion.
Ethereum (ETH) volumes on smart contracts.
It’s possible, however, that coin owners simply don’t want to sell ETH at current prices, at a loss, and put them on stacking for that reason.
In general, the combination of the two factors, such as the mass exodus of coins from exchanges and their active placement on the stacking market, could support Ethereum.
On the one hand, the attractiveness of the staking reward will help avoid aggressive sales of the coin.
On the other hand, tokens deposited on the stack increase the security of the network and provide the liquidity much needed for the development of Ethereum-based projects.
Bulls on ETH could rebound above $2100
According to IntoTheBlock’s Global In/Out of Money Around Price (IOMAP) stats, ETH could make a bullish run toward $2100 if the current market sentiment changes appreciably.
As a reminder, this metric tracks addresses that are nearing breakeven and shows the distribution of hodlers along the average purchase price lines of the coin, thereby highlighting areas of significant resistance and support.
Buyers will first need to take the first barrier at $1855 to confirm a bullish outlook, though.. There were 1.98 million addresses that bought 6.87 million ETH at an average price of $1855.
If this strong resistance is successfully broken, the bulls can again reach $2100.
However, the path to it is also blocked by the $1900 to $2000 area, represented by a cluster of 3.75 million addresses that bought 4.21 million coins.
Ethereum (ETH) and IOMAP data.
In the meantime, the bears will gain the upper hand if support at $1772 breaks, which will be defended by 2.58 million investors with 3.48 million ETH bought at an average price of $1772.
In this case, the fall may continue up to $1650.