Ethereum Collapses 24% in Weekend Rout as Staked Assets Drop Pegs

Key Insights:

• Ethereum has fallen below its 2018 peak price.
• Some staked ETH assets have dropped their pegs.
• Gloomy predictions ahead for ETH prices.

Ethereum prices are still tanking during the Monday morning Asian trading session, and the asset has lost a whopping 24% since late Friday. At the time of writing, ETH was trading at $1,350, down 8% on the day as the sell-off continued.

On-chain analytics provider Glassnode reported that the Ethereum market has fallen below the ETH Realized Price of $1,781. This was on June 12 when the asset plunged to $1,453 – it has lost even more since then.

The realized price of ETH 2.0 deposits is even higher, so the weekend attack of the bears has resulted in unrealized losses of more than 40%.

With the price declines over the weekend, the #Ethereum market has fallen below the $ETH Realized Price of $1,781.

This means the market is holding an average unrealized loss of -18.4%

The Realized Price of ETH 2.0 deposits is higher at $2,404, with an unrealized loss of -39.6% pic.twitter.com/yleNe7111X

— glassnode (@glassnode) June 12, 2022

ETH Staking Issues

There is a lot of concern about the ETH currently staked and locked on Beacon Chain flooding the markets after the Merge later this year. It could induce an even heavier price collapse. However, the assets will be released in stages several months after the Merge.

Market analyst Alex Krüger observed that ETH had fallen back to its previous peak price during the 2018 cycle, but it is currently below that today.

Remarkable how today's $ETH bottom ($1423) coincides almost to the tick with the $ETH top of 2018 ($1420). pic.twitter.com/eHVF3O0V1P

— Alex Krüger (@krugermacro) June 12, 2022

Technical indicators such as the RSI are deep into oversold territory for ETH at the moment. While there could be a minor bounce to the upside, the bear market is only deepening, meaning more pain ahead for Ethereum and all cryptocurrencies for a while.

There are also concerns over staking protocols such as Lido, which has almost a third of the total amount staked. According to industry experts, such centralization could result in an attack on the network.

Another issue is the de-pegging of staked assets. When users stake ETH on Lido, they get the equivalent stETH in return to use as collateral on other DeFi platforms. The major sell-off has resulted in a divergence in the price of ETH and its staking token, which is currently trading 4.4% below its peg, according to CoinGecko.

Ethereum Price Breakdown

Technical analysts predict a massive breakdown in Ethereum prices following the formation and confirmation of a head and shoulders pattern. The gloomy outlook puts the ETH price at around $650, according to this analyst.

🚨🚨The massive head-and-shoulder formation forecasted earlier for #Ethereum has now been completely confirmed…

… $ETH is now headed towards the $650 USDT area!!! pic.twitter.com/R2KaqiorEd

— Vince Prince (@Vince_Prince_) June 12, 2022

A dump that low would result in a correction of almost 87% and considering the last cycle saw ETH fall by 84%, he may not be far off with that prediction.

On a brighter note, Ethereum’s long-term prospects are excellent, especially once it transitions to proof-of-stake and rolls out scaling upgrades. The supply issuance has been predicted to become deflationary, and it will still yield returns for stakers, making it a unique asset.