Amid the crypto broader market correction, the world’s second-largest digital asset Ethereum (ETH) is already down 7.5% trading under $1,200. The recent price crash has eroded all of last week’s gains for ETH.
Now, the cryptocurrency faces the risk of further downfall going ahead. Since the Beacon chain upgrades last year, ETH investors have been staking their coins with Ethereum 2.0. Now, the newly upgrade Ethereum 2.0 blockchain holds 12% of the total supply.
On the other hand, the ETH exchange reserves have dropped down to 15% of the total supply and continue to decline further. However, ETH faces a potential threat to its price as the Shanghai hardfork approaches closer, scheduled for March 2023.
This hardfork will make it possible for investors to withdraw the staked Ether with the network validators. On-chain data provider CryptoQuant explains a scenario that could lead to a mass selling in the price of Ether.
What Happens to ETH With Withdrawals on Ethereum 2.0?
One of the most imminent questions that ETH investors have is how much ETH can be withdrawn on Ethereum 2.0. Nearly 12% of the total supply or 15 million ETH coins currently reside on Ethereum 2.0. Data provider CryptoQuant explains:
“From a short-term perspective, there are higher APY strategies than staking rewards by depositing ETH2 that might not be promised to withdraw”.
Also, let’s have a look at the change in the balances of Ethereum 2.0. Compared to the last year 2021, the total number of depositors with ETH2 has jumped by 57% this year. However, the total deposit balance has remained the same. This shows that the total balance per deposit has ultimately jumped by 133% in 2022.
Commenting on the ETH exchange reserves, CryptoQuant explains: “It may be that the balance of $ETH2 increases as the $ETH exchange reserve decreases. 18M of $ETH are held on the exchange, 15% of the total supply. However, the exchange reserve is an ongoing downtrend”.
As the supply dynamics shift after the Shanghai hardfork, ETH price volatility will be imminent.
The post Ethereum Price Prediction: Why ETH Price Could See Major Selling Ahead? appeared first on CoinGape.
