Ethereum is currently following the general crypto market trend at this point and has only posted slight gains over the last 24 hours. With the bear market in full swing, a large number of cryptocurrencies remain at risk of losing more than their value. However, for Ethereum, there may be a bullish trend on the horizon and it has to do with staking on the network.
Shanghai Upgrade Will Increase Ethereum
Currently, compared to other Layer 1 share networks in the sector, Ethereum sees the lowest percentage of supply purchased. Less than 14 ETH supply is at stake, so there is no withdrawal mechanism for those who stake in the network, but this could change quickly and bring new enthusiasm to the market.
Ethereum’s “Shanghai” upgrade is expected to take place in March 2023 and a Matrixport report shared with NewsBTC via email expects this to be the trigger for the digital asset. As he said, “it looks like more ETH will be at stake after March and this could add pressure on the ETH price.”
The reason behind this is simple; more ETH is staked, less supply in the market, and scarcity leads to higher prices. Instead of staked ETH volume actually declined, it is expected to increase because if the withdrawal is possible, investors will be more confident to stake coins, knowing that they can easily get it back.
“With more ETH being staked and removed from circulation, downward price pressure appears to be limited as long as ETH remains bought.”
Another rally to $1,600 for ETH
The report further details the expected price reaction for Ethereum after the “Shanghai” upgrade. It notes that the digital asset has broken out of a sideways consolidation, which is good because the breakout from the previous consolidation saw ETH rally up to 39% in 2022.
ETH jumps above $1,250 | Source: ETHUSD on TradingView.com
So if another breakout like this happens, it’s possible that the digital asset could see an increase of more than 27% like it did in October 2022. This would definitely bring the price up to $1,600 with a 27% rally, and above $1,750 with a 39% rally. It also predicts lower volatility for 2023, but still expects investors to see a 9.8% increase with 63% volatility for March 23.
In addition to the factors described in the Matrixport report, another thing that can support this bull case is the “rumor buying” event. This is often the case that leads to important upgrades such as “Shanghai” where investors use anticipation to boost the price of digital assets. Therefore, in the months and weeks leading to the upgrade in March, various rallies can be triggered that will bring the price of ETH to at least $1,500.