Ethereum: Stakers, what next after ETH’s sluggish price action?
- The amount of ETH staked grew by 11% since the Shapella Upgrade.
- Over 60% of the stakers were in losses since they locked their ETH on the network.
Users in the crypto space have shown significant interest in Ethereum [ETH] staking since the Shapella Upgrade went live last month. Following a successful test of the withdrawal process, users have returned to restake their ETH.
According to a tweet by an investment expert, ETH locked with liquid staking providers has reached an all-time high (ATH) in May, marking the fifth consecutive month of growth. The most impressive aspect of this trajectory was that staking was gaining traction, although ETH’s price was still 60% lower than its peak value of November 2021.
With ETH still 60% off all-time highs, the amount of ETH staked in dollar terms is at all-time highs in May.
Up & to the right. ?
— Erik Smith, CFP® (@eriksmithcfp) May 29, 2023
A lot is at stake
As per the Nansen dashboard, the amount of ETH staked on the Beacon chain has surged to 21.6 million ETH at the time of writing, a considerable 11% growth from what it was during the Shapella Upgrade on 12 April. Even during the last 24 hours, there was a net deposit of 47k ETH, suggesting that users had more confidence in the staking mechanism.
The interest in staking was also reflected through the growth in new depositing addresses. As per Glassnode, the number of new validators locking 32 ETH in Ethereum’s smart contract has increased substantially in May.
Stakers show faith
Contrary to fears of a sell-off, ETH jumped 13% in the first week after the upgrade, breaking past the $2000 level. However, broader market conditions cut the rally short and ETH was stuck in the $1800 region over the last three weeks.
As a result, over 60% of the stakers were in losses since they locked their ETH on the network, as per data fetched from a Dune dashboard. A lot of this staking occurred between $1,600 and $3,500 during the peak of the 2021 bull run.
A steady drop in prices could lead to conservative stakers withdrawing their stake and cashing them out in the market. However, their current trend was antithetical to this narrative.
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Will ETH see more interest?
As far as demand for ETH futures was concerned, the nominal value of Open Interest (OI) stayed flat over the past few days, signifying sluggish speculative interest for the second-largest altcoin by market cap, as per Coinglass. However, there was a slight uptick observed over the last 24 hours.
The surge attracted bullish leverage traders to ETH as the number of long positions taken for ETH increased.