Why is Ethereum (ETH) Price Outperforming Bitcoin this Week? 

Insights: 

• Ethereum (ETH) price has shown slightly more resilience than BTC as the crypto markets endured a pull-back this week. 
• On-chain data trends reveal how Ethereum holders opted to deposit their holdings into ETH 2.0 staking contracts rather than sell. 
• According to historical accumulation trends ETH faces a significant challenge crossing the $2,450 resistance.

Ethereum (ETH) price showed more resilience than Bitcoin (BTC) as the crypto markets endured a pull-back this week. Following a swift recovery on Wednesday, ETH bulls now face a key resistance around the $2,400 area. 

Will Ethereum price make a decisive breakout or endure another short-term correction?

Ethereum Investors Staked ETH Worth $15M During the Price Dip

Ethereum price dipped on Wednesday, as global risk asset markets endured a subdued price action following the US CPI and inflation report for November. The Fed’s second consecutive rate pause announcement on Wednesday buoyed investors’ confidence and sent mega-cap crypto prices into an instant rebound. 

But notably, Ethereum appeared to have shown more resilience than BTC during that market downturn that ensued between Dec 10 and Dec 13. While Bitcoin price sank 10% to a weekly low of $40,555, ETH price took a relatively lesser hit of 8%. 

This strong performance has been attributed to the ETH holders opting to stake their assets to mitigate losses during the price downturn rather than sell. 

In confirmation of this stance, on-chain data culled from CryptoQuant showed that ETH 2.0 smart contract recorded significantly higher deposits this week. As seen below, the deposits began to increase around Dec 10, just as Ethereum prices started to drop. 

In total, Ethereum holders deposited a total of 7,019 ETH into the ETH 2.0 beacon chain smart contract between Dec 10 and Dec 14. Valued at the 5-day SMA price of $2,255, ETH holdeers staked coins worth $15.8 million amid the recent price dip, rather than sell.  

A rapid staking wave during a price downturn is considered a bullish signal, for a few reasons. 

Firstly, when holders stake large quantities of coins within a short period, as observed above, it reduces the number of coins readily available to be traded on exchanges. This deflationary pressure caused by that decline in market supply inadvertently helps to reduce selling pressure.  

More importantly, it signals the existing major stakeholders remain confident that the downturn is temporary. Hence, rather than sell, they opt to tide over the bearish headwinds by staking, and earning passive income. 

These factors appear to have helped ETH maintain a relatively stronger performance than BTC over the past few days. If the staking deposits persists, it will likey swing the market momentum back in favor of the bulls soon enough. 

Forecast: Can ETH Reach $2,500 Before 2024? 

Ethereum price looks set to reclaim the $2,500 territory in the short-term. From an on-chain perspective, prospective corporate investors accumulating ETH to front-run the impending Spot ETF approval, and existing holders staking their coins to tide over market volatility, could combine to further accelerate the price rally. 

However, historical buy/sell trends show that the $2,400 area poses a significant resistance to the next Ethereum price bounce. 

The In/Out of the Money Around Price (IOMAP) data, which groups the current ETH holders based on their entry prices, also affirms this skittish outlook.

It shows that 10.49 million current holders had bought 4.9 million ETH at a minimum price of $2,453. Ethereum price could suffer another retracement if those holders look to take some profits, after over 1-year of holding at a loss.  

But if the ETH 2.0 staking deposits keep rising, Ethereum price will likely smash that resistance has reclaim $2,500 as predicted.

On the downside, the bears could invalidate that positive prediction if ETH price dips below the critical psychological resistance at $2,000. But, in that case, the 5.53 million holders that bought 40.13 million ETH at the average price of $2,029 could offer significant support. 

Since the ETH Spot ETF approval is also expected in the next few months, ETH price will likely avoid that bearish scenario in the short-term.