Markets
Ethereum Price at Risk as ETH 2.0 Withdrawals Rise by 4,000%
Ethereum price rose above $3,040 on May 17, up 6% from a 14-day low of $2,862 recorded on May 14, but spikes in withdrawals from ETH 2.0 staking threaten to impede the rebound phase .
Ethereum’s price surge lags behind the cryptocurrency market average
ETH has failed to get its fair share of capital inflows as bullish momentum returned to cryptocurrency markets this week.
The latest CPI data released on May 14 by the US Bureau of Labor Statistics and GameStop’s resurgent rally have emerged as the major catalysts spurring bullish activity in cryptocurrency markets this week.
Driven by mega-cap assets such as Bitcoin (+9%), SOL (+22%) e PEPPER (+70%), the total cryptocurrency market capitalization has increased by $194 billion since the start of the week on May 13.
At the time of writing on May 17, Ethereum’s price is currently hovering around the $3,042 territory, up 6% from May 13. Compared to trends seen in rival mega-cap Tier 1 assets such as Bitcoin and Solana, Ethereum’s price has underperformed considerably.
ETH 2.0 Withdrawal Queue Increases 4,000% in 5 Days
Ethereum’s lagging performance is well illustrated in the TradingView chart above. However, on-chain staking data from the ETH 2.0 beacon chain reveals even more worrying signs that could trigger intense volatility in Ethereum price action in the days to come.
The validation queue graph below provides real-time information on the number of investors looking to join the ETH 2.0 staking pool versus those looking to withdraw their funds.
– Announcement –
At the start of the week, only 93 stakers moved to withdraw their staked ETH from the beacon chain on May 14. But that figure has now skyrocketed to 3,868 addresses at the time of writing on May 17.
This implies that the number of ETH node validators queuing to make withdrawals has increased by 4,000% over the past 3 days, raising concerns of impending bearish pressure. Meanwhile, over the past week, the ETH 2.0 deposit queue has collapsed by 97% from 1,842 to 61 entry addresses.
The combination of higher withdrawals and lower deposits creates a dual catalyst of downward pressure on Ethereum’s price, partially explaining why ETH’s price has failed to catch up with the market’s broader uptrend this week.
On the one hand, the rapid increase in withdrawals adds to the circulating supply of ETH, potentially flooding the market. On the other hand, the sharp decline in new deposits signals a decline in long-term confidence among investors.
These critical factors could combine to exacerbate bearish trends, leading to increased market volatility and prolonged downward pressure on Ethereum prices.
ETH Price Forecast: Another Reversal Below $2,900?
At the time of publication on May 17, the price of Ethereum is currently around $3,040. However, as traders begin to react to the 4,000% spike in ETH 2.0 staking withdrawals, Ethereum price will likely collapse below $2,900 in the near term.
The Bollinger band technical indicator also supports this pessimistic ETH price prediction.
As seen below, the upper bound Bollinger Band indicator shows that ETH price is still some distance away from reclaiming the critical resistance level at $3,200, which would give the bulls control of the momentum of the market.
However, if ETH price were to collapse below the short-term support at the 20-day SMA price level at $3,023, it could open the doors for a quick bearish reversal towards $2,825.
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.
-Announcement-