Ethereum is following the crypto market trend and has posted only minor gains over the past 24 hours. A large number of cryptocurrencies are at risk of losing even more value with the bear market currently in full swing. There could be a bull market for Ethereum. This is due to staking on Ethereum.
Shanghai Upgrade Will Drive Ethereum up
Ethereum has the lowest percentage of supply staked compared to other Layer1 proof of stake networks within the sector. It is because there is no withdrawal mechanism for those who stake on Ethereum. However, this could change soon and give the market renewed vigor.
The Ethereum “Shanghai” upgrade is expected to take place sometime in March 2023 and a Matrixport This is expected to be a bull trigger on the digital asset, according to a report that NewsBTC received via email. As it puts it, “it seems extremely likely that more ETH will be staked after March and this could put upward pressure on ETH prices.”
The logic behind this is simple: the more ETH is staked the lower the supply and scarcity causes higher prices. Instead of ETH volume falling, it will likely increase as investors will be more confident about staking their coins knowing that withdrawals are possible.
“With more ETH being staked and removed from circulation, the downside price pressure seems limited as long as ETH remains staked.”
Another Rally Up to $1,600 For ETH
The report further elaborates on its expected price reaction for Ethereum following the “Shanghai” upgrade. The report mentions that the digital asset has already broken out of its sideways accumulation, which is a good sign as previous consolidations could have seen ETH rally up to 39% in 2022.
ETH jumps above $1,250 | Source: ETHUSD on TradingView.com
It is possible that the digital currency could experience a similar breakout to October 2022. This would raise its price to $1,600 with an increase of 27% and $1,750 respectively with a 39% rise. It predicts lower volatility in 2023 but expects investors still to see a 9.8% rise with a 63% implied volatilty for March 23.
Besides the factors outlined in the Matrixport report, another thing that could support this bull case is a “buy the rumor” event. These often occur leading up to important upgrades such as “Shanghai” where investors capitalize on the anticipation to drive the price of a digital asset up. Therefore, in the months and weeks leading up to the upgrade in March, multiple rallies could be triggered which would bring ETH’s price to at least $1,500.