Ethereum kicked off the trading week with a strong start, opening at $2,928 on Monday, May 13. This represented a 4% increase over the weekend. However, recent trends in ETH 2.0 staking indicate potential downside ahead.
In a significant development, Ethereum has surpassed 1 million node validators, marking a major milestone in May 2024. These validators have staked their coins on the network, completing Ethereum’s transition from Proof-of-Work to Proof-of-Stake consensus with the Shappella upgrade executed on April 12, 2023. This upgrade allows ETH holders to earn passive income and contribute to the network’s security.
The number of active node validators currently stands at 1,015,570 as of May 13, 2024, according to data from Ethereum’s Beacon chain. These validators have collectively staked a total of approximately 32.5 million ETH, equivalent to around $96 billion. This achievement of 1 million unique stakers has alleviated concerns about the centralization of staking power among a few wealthy investors, making the ETH project more appealing to long-term investors.
However, in the short term, the situation may be different. Looking at another critical metric, it appears that ETH has been struggling to attract new stakers since the Bitcoin halving. The number of stakers entering the Ethereum validator queue has significantly declined since April 16. On May 12, only 704 unique addresses joined the staking queue, representing a 98% decrease from the peak recorded on April 16. This decline could be attributed to fears of a crypto market crash after the Bitcoin halving on April 20, as well as the 13% dip in ETH price since April 16.
While reaching 1 million validators is a significant milestone for Ethereum’s future viability and network decentralization, the continuous decline in new entrants could have a bearish impact on ETH’s short-term price action.
At the time of writing, Ethereum’s price is trading around $2,960 on May 13. However, the drastic drop in new staking inflows puts ETH at risk of breaking below the $2,900 level in the near term. The lower-limit Bollinger band technical indicator suggests that there could be initial support at the $2,847 level. However, if this support fails, a breakdown below $2,800 could be likely.
On the other hand, if market sentiment turns positive due to upcoming US CPI and PPI inflation reports, the bulls may aim for a rebound towards $3,200. However, there is a significant resistance level at $3,063 that could hinder short-term progress.
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