Ethereum Price (ETH) Rally Fueled by Increasing Staking and Exchange Withdrawals
As Ethereum (ETH) rebounds from its June 2023 lows, a combination of factors has contributed to its upward trajectory. Notably, the rise in ETH prices can be attributed to the growing popularity of ETH staking and significant withdrawals from centralized cryptocurrency exchanges like Binance and Coinbase.
At the time of writing, ETH is trading at $1,912, showing stability over the past two days while exhibiting a bullish pattern following substantial gains earlier in the week. Traders are optimistic about the potential for further price increases, targeting levels above the recent highs reached in April 2023, particularly around $2,100.
According to data from Etherscan, there have been more than 216,000 transactions involving users staking over 25.5 million ETH, with a total value exceeding $48.9 billion at current spot rates. This steady rise in staking activities indicates strong support from the broader Ethereum community and confidence in the network’s overall stability and potential.
The recent transition of Ethereum from a proof-of-work to a proof-of-stake consensus algorithm has been a significant development. With this shift, the blockchain relies on validators rather than miners to confirm transactions and secure the network. Validators are required to stake a minimum of 32 ETH in their nodes and actively participate in the network to validate transaction blocks and receive rewards of 2 ETH. On average, the Ethereum network distributes block rewards and fees every 12 seconds.
As of June 25, on-chain data indicates that validators have staked an average of 32.18 ETH, and there are currently over 630,000 validators actively participating in the Ethereum network. This consistent increase in the number of validators and staked ETH demonstrates the strengthening of the network, even after the recent Ethereum Shapella upgrade.
Following the upgrade, validators were allowed to unlock their staked coins for the first time since the launch of the Beacon Chain’s phase 1 in late 2020. While there were concerns about potential price dumps as validators unlocked their coins to realize capital gains, the number of Ethereum stakers has continued to rise, further bolstering the network’s resilience.
The rising number of ETH stakers also leads to a decrease in the circulating supply, which contributes to trader confidence. Additionally, the increasing withdrawals of ETH from centralized exchanges have played a role in boosting market sentiment. According to Glassnode, the amount of ETH held in centralized exchanges has reached record lows.
These exchange withdrawals have been prompted by recent lawsuits filed by the United States Securities and Exchange Commission (SEC) against Binance and Coinbase, two prominent cryptocurrency exchanges in terms of client count and trading volumes. As a result, some crypto holders have opted to withdraw their coins from these exchanges and transfer them to non-custodial wallets that offer greater control and security.
Historically, withdrawals of coins from cryptocurrency exchanges are seen as a bullish signal. While both Coinbase and Binance have expressed their intention to defend themselves against the regulator’s actions, the impact of these developments on ETH prices in future trading sessions remains to be seen.
In summary, the combination of increasing ETH staking activities and significant withdrawals from centralized exchanges has fueled the recent price surge of Ethereum. These factors, coupled with ongoing network upgrades and a growing Ethereum community, contribute to the positive sentiment surrounding ETH and its potential for further price appreciation.
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