Ethereum Price Outperforms Crypto Market as ETH 2.0 Staking Crosses $300M

Key Insights:

• Ethereum (ETH) price broken above the $2,300 on Feb 6 while Bitcoin (BTC) and the rest of the crypto markets suffer a $37 billion setback.
• The 143,103 ETH (~$329 million) staking inflows on Jan 31, and 137,472 ETH on Feb. 2 were the highest recorded since Dec. 3, 2023.
• Increased staking and positive sentiment surrounding upcoming Dencun  upgrade have propped up ETH price action in recent weeks.

On Feb 6, Ethereum (ETH) price is trading above $2,300 territory, while Bitcoin (BTC) and the rest of the crypto markets suffer a $37 billion setback

On-chain metrics beam the spotlight on how rising ETH 2.0 staking inflows ahead of the upcoming Dencun upgrade have contributed to Ethereum’s positive start to February despite a dominant bearish sentiment across the crypto markets. 

ETH Price Has Outperformed Crypto Markets in February 

Ethereum price has broken market trends this week, scoring sizable gains in the first 6 days of February 2024, while the Bitcoin (BTC) and rest of the crypto market stumbled.

Between January 31 and February 6, ETH price has entered a leg-up from $2,241 to $2,326 as depicted in the chart below. Meanwhile, during that period, the total crypto market cap has dipped 2%, shrinking by over $37 billion. 

This effectively shows that Ethereum price has outperforming the market average. Ethereum’s resilience amid the broader market downturn suggests several underlying bullish factors are now at play. 

Positive speculations surrounding the ETH spot ETF continue to swirl. But notably, the recent uptick in ETH 2.0 staking deposits appears to be the dominant driver behind Ethereum’s positive price action in February 2024, so far. 

Staking Deposits Crossed $300M For the First time in 2024

Ethereum 2.0 staking has become a major fixture within the Ethereum ecosystem since the Shappella upgrade marked the complete transition to Proof of Stake consesus back in April 2023. 

And more recently, co-founder, Vitalik Buterin has mooted a series of additional network improvement proposals including a gas limit increase.

Furthermore, the widely-anticipated Dencun upgrade, which is expected to be completed in Feb.7 is also set to increase the network scalability. 

This flurry of network developments appear to have yielded positive stakeholder reaction among Ethereum stakeholders in recent weeks. 

Cryptoquant’s Staking Inflow data tracks the number of coins deposited in ETH 2.0 smartcontracts daily. The chart below vividly illustrates that 143,103 ETH (~$329 million) staking inflows on January 31 was the highest recorded since Dec 3, 2023. 

Staking deposits are crucial to the security and functionality of any Proof of Stake network. However, when there is a noticeable increase in staking during a broad market downturn as observed above, it suggests that investors within that cryptocurrency ecosystem are maintaining a positive long-term outlook. 

Hence, rather than join the market sell-off, Ethereum holders are increasingly staking to tide over the market correction by earning passive income. 

Staking deposits effectively cools selling pressure by temporarily reducing the number of coins available to be traded on exchanges.

This explains how ETH price has managed to outperform the rest of the crypto market in February 2024 so far.  

Forecast: $2,500 Target Remains in Focus

In summary, increased staking and positive sentiment surrounding upcoming network development have propped up ETH price action in recent weeks. With these factors still in play, Ethereum could stage another attempt at the elusive $2,500 price target in the days ahead. 

However, the bulls face significant short-term resistance at the $2,350 area. 

IntoTheBlock’s Global In/Out of the Money data shows that 1.34 million current holders had acquired 4.68 million ETH at the average price of $2,358. Having held at a loss for nearly a month, they could be tempted to exit once price approaches their break even point. 

But if the bulls can scale that resistance, it could open the doors to a $2,500 retest as predicted. 

On the flipside, the bears could negate this optimistic prediction by forcing a reversal below the $2,000 area. However, as depicted above, the bulls could mount a formidable support buy-wall at $2,040.