Ethereum
Why an increase in Ethereum staking hasn’t helped the price of ETH
- The amount of ETH staked has increased significantly over the past few weeks.
- The ETH price continued to move sideways.
Ethereum [ETH] remained stagnant around the $3,600 level for some time. But despite this sideways movement, optimism around the cryptocurrency has remained high.
This has been demonstrated by the growing interest in staking ETH over the past few weeks.
Ethereum Staking on the Rise
According to recent data, 32.5 million ETH has been staked on the network.
Source:
Even though the number of stakers has increased, which can generally cause rewards to increase, the reward rate and inflation rate for staking ETH have both decreased.
Reward rate refers to the annual percentage return a user gets from staking ETH. This is essentially the interest that a user earns for helping to secure the network.
The inflation rate, on the other hand, reflects how quickly the total supply of ETH is increasing. New ETH is created as staking rewards, which contributes to inflation.
A decreasing reward rate means that a user will earn slightly less new ETH per token staked in the short term. However, a falling inflation rate suggests that the total supply of ETH is growing at a slower rate.
In the long term, this could actually be a positive sign for the value of ETH. If demand for ETH remains strong while supply increases more slowly, this could drive up the price of ETH.
Source: Staking Rewards
At press time, ETH was trading at $3,669.67. After surpassing the $3,600 level following the ETF announcement, the price moved between $3,979 and $3,607.
This recent ETH price correction could be attributed to profit-taking by short-term holders after the sudden price rise.
ETH’s RSI (Relative Strength Index) has declined significantly over the past few days, implying that ETH’s bullish momentum has slowed.
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Additionally, the CMF (Chaikin Money Flow) for ETH has also decreased, implying that the money flowing into ETH has decreased. If bearish sentiment prevails, ETH could retest the $3,607 levels before moving higher.
Source: Commercial View
The growth of the Ethereum network has also declined significantly over the past few days. This implied that new addresses showing interest in ETH had declined, which could cause problems for the altcoin in the long term.
Source: Santiment