Ethereum is currently following the general crypto market trend at this point and has been posting only slight gains in the last 24 hours. With the bear market in full swing, a large number of cryptocurrencies remain at risk of losing more of their value. However, for Ethereum, there could be a bull trend on the horizon and it has to do with staking on the network.
Shanghai Upgrade Will Drive Ethereum Up
Currently, compared to the other Layer 1 proof of stake networks in the sector, Ethereum sees the lowest percentage of supply staked. At less than 14 of ETH supply being staked, it comes down to there not being a withdrawal mechanism for those who stake on the network but this could change very soon and bring with it renewed vigor to the market.
The Ethereum “Shanghai” upgrade is expected to take place sometime in March 2023 and a Matrixport report shared with NewsBTC via email expects this to be a bull trigger for the digital asset. As it puts it, “it seems extremely likely that more ETH will be staked after March and this could put upward pressure on ETH prices.”
The reasoning behind this is a simple one; the more ETH is staked, the less supply in the market, and scarcity leads to higher prices. Instead of staked ETH volume actually declining, it is expected to increase because once withdrawals are possible, investors will be more confident to stake their coins, knowing that they can easily get it back.
“With more ETH being staked and removed from circulation, the downside price pressure seems limited as long as ETH remains staked.”
Another Rally To $1,600 for ETH
The report further elaborates on its expected price reaction for Ethereum following the “Shanghai” upgrade. It notes that the digital asset is already breaking out of its sideways consolidation which is a good thing as such a breakout from previous consolidations had seen ETH rally as high as 39% in 2022.
ETH jumps above $1,250 | Source: ETHUSD on inew.news
So if another breakout such as this were to take place, it is possible that the digital asset could see an over 27% increase just like it did in October 2022. This would obviously bring its price back up to $1,600 with a 27% rally, and above $1,750 with a 39% rally. It also predicts lower volatility for the year 2023, but still expects investors to see a 9.8% increase with a 63% implied volatility for March 23.
Besides the factors outlined in the Matrixport report, another thing that could support this bull case is a “buy the rumor” event. These often occur leading up to important upgrades such as “Shanghai” where investors capitalize on the anticipation to drive the price of a digital asset up. Therefore, in the months and weeks leading up to the upgrade in March, multiple rallies could be triggered which would bring ETH’s price to at least $1,500.