Ethereum (ETH) began trading at $3,140 on April 25, signaling the start of a potential recovery phase for the pioneering smart-contract network. Analysis of on-chain data suggests that the reaction of ETH investors to the Bitcoin halving could play a crucial role in the next market rally.
Could Ethereum reach $3,500 once again?
Investors have staked a total of $620 million worth of ETH in just five days.
On April 20, the Bitcoin network underwent its fourth halving event, causing significant market volatility as investors rushed to position themselves for potential gains. Since the halving, Ethereum has struggled to gain momentum due to declining market liquidity and cautious sentiment among short-term traders. However, data from on-chain trends shows that Ethereum node validators are adopting a more positive outlook.
The chart provided displays real-time changes in the number of ETH coins deposited in Ethereum Proof-of-Stake (PoS) Beacon Chain smart contracts.
Following the Bitcoin halving on April 20, the total staking deposits on the Ethereum Beacon Chain amounted to 31.6 million ETH. Interestingly, investors have staked an additional 300,000 ETH, bringing the total stake to 31.9 million ETH as of April 25.
In addition to enhancing the security of the Ethereum network, an increasing number of staked coins also reduces short-term market supply. This could be crucial in mitigating sell-side pressure during periods of low market demand.
Based on current prices, the staked coins represent a value of over $620 million within just five days of the Bitcoin halving. Undoubtedly, this has played a significant role in helping ETH maintain its support level of $3,000 in recent days.
ETH price forecast: A challenging road to $3,500
While the withdrawal of $620 million worth of ETH by node validators temporarily supports Ethereum’s consolidation above $3,000, further efforts are required to reach the $3,500 mark.
According to IntoTheBlock’s In/Out of the Money chart below, ETH must first overcome the sell-wall at the $3,250 level in order to reclaim $3,500.
The chart shows that 2.1 million addresses have acquired 4.58 million ETH at an average price of $3,236. If these addresses decide to sell at their break-even point, it could pose significant resistance for the ETH price, making it challenging to surpass $3,250 in the near future.
However, if Ethereum stakers continue to deposit more coins into the Beacon Chain, the bulls may take advantage of the decreasing market supply to initiate a decisive breakout above $3,500.
In the event of a bearish reversal, ETH could potentially drop as low as $2,918 before finding strong support.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. The opinions expressed in this article are solely those of the author and do not reflect the views of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions. The Crypto Basic is not responsible for any financial losses incurred.