The crypto market's latest upward rally was spiked by several factors, like the increase in US consumer confidence in March, recent advancements within the sphere, and increasing mainstream adoption. The market has increased by 2.5% to $1.16 trillion, and experts say that cryptos like Ethereum are leading the bull case for 2023.
The crypto has managed to be one of the strongest investments in the space because of its utility and strong network fundamentals. But what are some of the key catalysts for ETH’s bull run? Can its shrinking supply push the price up to $2000? Let’s see.
ETH Price Analysis
ETH has touched a peak of $1,799.14 today and is trying to revisit its multi-month high soon. It currently boasts a market cap of $220,172,382,633. The shift to a more energy-efficient Proof-of-Stake was the last major upgrade to the altcoin’s blockchain.
2023 is indeed an active year for the crypto with the Shanghai, Shapella, and the token unlock in the pipeline.
Ethereum Token Unlock Could Open Doors For Liquid Staking Derivatives
Ethereum’s token unlock would not have as many negative effects on ETH, as there is an option for stakers to channel their tokens into liquid staking derivatives.
Adriano Feria, a prominent AI advocator and crypto analyst, argues that the availability of liquid staking derivatives and assuming stakers to be completely illiquid upon arrival in Shanghai would overlook the negative scenario for the ETH token.
Stakers are generally seen as committed holders who have no intention of selling during a bear market. Releasing staked ETH tokens while the altcoin is 50% below its peak is insignificant. Re-staking ETH could boost the altcoin's deflationary pattern, eventually boosting ETH's price. Liquid Staking Tokens are slowly making a comeback as the ETH token unlock is coming closer.
The number of ETH deposited on Lido, the liquid staking protocol which works on the Ethereum blockchain, shows new staking deposits, with 45,600 ETH staked since March 22, representing 36.4% of 7-day ETH deposits.
ETH deposited on Lido
Liquid Staking Tokens Shows A Recovery
It is important to note that the validators unlocking their staked tokens are up for unrealized losses since the ETH price is merely 50% away from its previous all-time high.
Rather than incurring losses by selling their assets below its acquisition price, Liquid Staking initiatives are providing attractive yields, and their tokens have demonstrated a considerable recovery since Tuesday.
Liquid Staking tokens
The upcoming token unlock would act as a bullish driver for the loosely-pegged Ethereum stablecoin implying that there are increasing protocol revenues regardless of any losses. The funds that are currently awaiting release will assist in reducing the associated risk of execution and also eliminate any Fear, Uncertainty, and Doubt (FUD) surrounding new Liquid Staking initiatives and their corresponding tokens.
The shift to PoS removed 70,000 ETH tokens from its circulation supply. As a result, experts are highly bullish on ETH’s upcoming price rally to $2,000 since these tokens are pulled out of circulation, reducing selling pressure on Ethereum and fueling its price rally to new all-time highs.
Ethereum Supply Decreasing Post Merge
Can Ethereum’s Reducing Supply Boost ETH’s Rally To $2,000?
Ethereum, the most established altcoin in the crypto sphere, has added another key catalyst to its 2023 price rise with its deflationary status, thanks to its recent burning rate. However, its shrinking supply is one of many growth drivers for it to peak at the $2000 target. There has been an increasing activity of non-fungible tokens (NFTs) and decentralized finances (DeFi) on the Ethereum blockchain recently, which has resulted in the burning of almost 8,000 ETH tokens over the previous week alone.
Several analysts have made their opinion via Tweets on ETH’s bullish prospects. For instance, Pentoshi posted predictions on Twitter about ETH’s potential to hit $2000 in 2023. In addition, the expert predicts that a rally above the $1,778 level is itself a bullish sign.
ETH/USD 1D price chart
However, a sudden drop below the previous high could invalidate the bullish prediction for Ethereum. Nevertheless, since Ethereum was successful in making a quick recovery from the FUD of the regulatory crackdown on the largest exchange, Binance, the crypto certainly has a positive outlook.
However, Ethereum’s supply economics and staking narratives are not merely the growth drivers for the crypto this year. Reports show investors have been piling into the asset over the past few weeks, and this increased interest is certainly an added advantage for its price rise.
Additionally, ETH whales have also paced up their accumulation rate recently, pushing the price. Therefore, if ETH continues to burn tokens at this rate and maintains a lower circulation supply than the number of tokens burnt, the second-largest altcoin would be an ideal option for long-term investors to generate profitable returns.
The Upcoming Shapella Update
Ethereum is all prepared for a bull run this year, as it also has another major upgrade in the pipeline. Shapella was proposed in 2022 and is one of the most significant developments of the blockchain after the Merge.
Once the update is launched, it will unlock over 17 million ETH, which is almost 15% of the total supply. Apart from the withdrawals, developers have also planned for three other modifications to optimize the gas fees concerning certain activities.
The Ethereum community and the larger crypto market are positive that crypto’s shrinking
supply could push the price to $2000 this year. It certainly has all the factors that could eventually result in a bullish run, making ETH the best crypto to buy now.