On Friday, the cryptocurrency market was glowing green thanks to modest price increases all around. Bitcoin was up 0.2% over the previous 24 hours to trade at $27,940, while XRP maintained above $0.511 and had daily gains of 2.85%. The only non-stablecoin cryptocurrency in the top 10 digital assets according to market capitalization was Ethereum. ETH had dropped by 0.5% in value in the previous day, and it was trading below $1,900.
All eyes are on the ETH pricing as there is less than a week till the eagerly anticipated Ethereum Shanghai and Capella upgrades slated for April 12.
On April 5, the biggest altcoin by market capitalization reached a 10-month high of $1,940 on Binance, breaking beyond the $19,000 barrier for the first time since August 2022. Since then, Ethereum has started to decline and is currently trading 5% lower at $1,853.
Even said, the price of Ethereum is rising and is anticipated to set the pace for other associated cryptocurrencies in a rally before the upgrades. Here are a few justifications.
The ETH2 Deposit Contract Is Waterlogged With Ether Tokens
Ethereum assets invested in the ETH deposit contract have remained frozen since the Beacon chain contracts were introduced in 2020, data from cryptocurrency research firm Delphi Digital indicates. Keep in mind that the price of ETH has dropped by around 63% from its high.
Since they are holding unrealized losses, the significant amounts of cryptocurrency staked in the deposit contract are « underwater. »
Tokens staked when the price of cryptocurrencies was between $1,900 and $4,900 are today underwater, according to the following Delphi Digital data on the condition of staked Ether. Notably, a sizable portion of the staked cryptocurrency is represented by this group.
The vast majority of stored ETH is submerged
The staked tokens should become accessible after the Shanghai hard fork. The general consensus is that validators cannot withdraw their staked assets, not just owing to the impending losses but also because of the minimal amount of ETH needed to qualify as a validator. The idea that the token unlock was a bullish development is strengthened by this.
Several favorable price actions
Despite the market turbulence brought on by the US financial crisis, according to statistics from TradingView and CoinMarketCap, the Ethereum price has shown outstanding gains on the weekly, monthly, and quarterly periods. The price of ETH has increased 3.6% in the last week, 18.9% in the previous 30 days, and 46.3% in the previous three months.
From a year-to-date perspective, the price of Ethereum has increased by 55.42%, which is noteworthy.
Since November 22, ETH has been steadily moving upward, breaching important resistance levels on the daily timeframe. These include the psychologically significant levels of $1,200 and $1,400, a significant supply-demand area that once stretched between $1,550 and $1,750 but is currently acting as support, and the regions indicated by moving averages.
Ethereum most recently surpassed $1,900, surpassing levels last seen in early August of last year. This has caused a lot of analysts to predict that we might reach $3,000 by the end of Q2 2023.
On-Chain Metrics Are Up For ETH
With regard to the proof-of-stake (PoS) token in the short to medium term, Ethereum on-chain indicators suggest a positive view. Santiment data indicates that ether whales have been accumulating over the last few weeks. In March, the supply of Ether owned by addresses with a balance of 1,000 to 10,000 ETH increased by 0.5%, according to its ETH supply distribution chart (blue line).
Similarly, there have been increases of 0.4% and 0.5% in the cohorts of 1 million–10 million ETH (brown) and 10 million–100 million ETH balances, respectively.
Accumulation of Ethereum whales
Source: Santiment
The 100,000–1,000,000 ETH (pink) and 10,000–100,000 ETH (orange) address cohorts’ selling pressure looked to be the primary driver of the rise. The network’s PoS contracts may also be to blame for the expansion, either directly or through the use of external stakeholder organizations like Lido DAO (LDO).
More information from Santiment shows that the balance of Ethereum on exchanges has been dropping. The blockchain data analytics company shared a graph on Twitter that showed how the balances of the top Ethereum addresses, when divided into exchange and non-exchange addresses, « are moving in opposite directions. »
The 10 largest known exchange wallets’ ether balances have reached record lows, while the ten largest non-exchange addresses’ ether balances have continued to rise.
This indicates non-exchange actors are building up their holdings and that cryptocurrency may be moving towards self-custody. This lessens the selling pressure on Ethereum across all cryptocurrency trading platforms. A decrease in selling pressure is positive for the price of ether.
The overall value of Ethereum is rising
The total value locked (TVL) on the Ethereum network has also been increasing, according to statistics from DeFiLlama. Increased stakes on the Lido protocol, which is responsible for 22.39% of all value locked on the Ethereum network, are partially to blame for this. The decentralized finance (DeFi) sector appears to be rebounding despite the TVL beginning to decline in March as a result of macroeconomic and regulatory challenges.
TVL for Ethereum Network
Source: DeFiLlama
On April 5, Ethereum’s TVL surpassed $50 billion, nearly surpassing the annual record of $51.4 billion set on February 21
Technical Analysis Of Ethereum Price Points To Additional Gains
The daily period technical setup of the ETH price indicates that the upward potential for the second-most popular cryptocurrency is still present. Similar to the price activity saw between July 22 and August 13, when the Ether rallied off the $1,420 support level to record a swing high at $2,030.
Because of this, Ethereum may increase from its present levels to reach the same heights as the one indicated above if the same scenario occurs. This would mean a 9.71% increase over the current price.
USD/ETH Daily Chart
The optimistic view for Ether was reinforced by several indications. The moving averages were initially pointing upward, indicating that the market was still in favor of an increase. Additionally, the price was trending lower than these moving averages. This implied that Ethereum’s price was expected to rise due to demand pressure from these areas and that it was resting on a firm base downward.
Additionally, the Relative Strength Index (RSI) was advancing above the midline in the positive zone. This trend-following indicator had a score of 58, which indicated that there were more buyers than sellers in the market.
Also situated in the favorable area above the neutral line was the Moving Average Convergence Divergence (MACD) indicator. It is important to keep in mind that the recommendation to buy Ethereum that was made on April 4 when the 12-day Exponential Moving Average (EMA) rose above the 26-day EMA was still valid, supporting the bullish view.
On-chain whale accumulation and a continuous rise in staking show the robustness of Ethereum’s pricing prior to the Shanghai and Capella upgrades. Considering that there are just five days until the event, traders anticipate more volatility in the price of ETH.
On the other hand, Ethereum might lose ground from its present levels and go below the psychological $1,800 barrier to hit the $1,700 support level. The SMAs between the $1,400 and $1,700 demand zone may be revisited below that level, and ETH may finally collapse below the $1,200 defensive line.
