Will Ethereum (ETH) 2.0 stakers sell off when the price hits $2,500?

After Ripple (XRP)’s victory against the SEC on Thursday, the price of Ethereum (ETH) exceeded $2,000 for the first time since April 2023. Ethereum is now gradually approaching the average purchase price of ETH 2.0 Stackers, how will they react?

THE Shanghai Upgrade enabled ETH 2.0 staking withdrawals in April 2023. But rather than unloading their coins as many analysts had predicted, Ethereum staking reached all-time highs as investors continued to wait for higher prices .

Ethereum Stakeholders May Start Pulling Back Soon

According to a 2022 report compiled by Glassnode, a significant portion of staked ETH was purchased at an average price of $2,390. Additionally, a more recent Coinmarketcap report also pointed out that 68% of staked ETH is held at a loss.

Ethereum (ETH) Stakeholders React |  ETH 2.0 Total Value Staked Realized price, July 2022
Ethereum (ETH) Stakeholders React | ETH 2.0 Total Value Realized Price, July 2022 | Source: Glassnode

However, with Ethereum having gained 70% year-to-date, the price of ETH is now approaching break-even for many ETH 2.0 players. This suggests that Ethereum may have difficulty clearing the $2,500 resistance.

Ethereum Stakeholders May Draw Attention to Liquidity Staking Protocols

Prior to the Shanghai upgrade, on-chain data shows that liquidity staking protocols like LidoDAO and Rocket Pool started gaining traction.

The chart below illustrates that since the conclusion of the Ethereum merger in April, user activity on LidoDAO has become closely correlated to the Ethereum price.

Specifically, the price of Ethereum gained 22% between June 14 and July 14. As shown in the graph below, LidoDAO Daily active addresses also began to increase around June 16. As the price of ETH surged above $2,000, LDO user activity jumped 126% to 625 daily active users.

Ethereum (ETH) Stakeholders React |  ETH price vs LidoDAO network activity, July 2023
Ethereum (ETH) Stakeholders React | ETH Price vs LidoDAO Network Activity, July 2023 | Source: Santiment

Daily active addresses evaluates user activity on a blockchain network by summing the number of wallet addresses performing transactions. Recent spikes in LidoDAO network activity can be attributed to ETH price gains.

When the price of Ethereum increases, a few other ETH 2.0 stakingrs become profitable and can move some of their coins to the LidoDAO ecosystem.

First, liquidity staking protocols like LidoDAO allow investors to gain exposure to ETH 2.0 staking without exceeding the required 32ETH minimum on the mainnet. Second, they also allow users to obtain wrapped versions of ETH (stETH) that they can deploy for other transactional purposes.

This helps stakingrs mitigate the opportunity cost of permanent staking on the Ethereum mainnet.

ETH Price Prediction: Bulls May Struggle to Reach $2,500

As a reminder, a significant portion of ETH 2.0 bettors had purchased their coins at an average price of $2,390. If they choose to break their 32ETH and move some of it to liquidity staking protocols once they break even, ETH may struggle to reach the $2,500 rally, even amid strong bullish momentum.

THE InTheBlock The Global In/Out of the Money Price data further validates this projection. As seen below, 7.3 million investors currently hold 33.55 million bought at an average price of $2,365.

If the above analysis is true, the rise in ETH prices could slow significantly once it approaches $2,500. Worse still, they could trigger a decline towards $1,970.

Ethereum (ETH) Price Prediction |  GIOM data, July 2023
Ethereum (ETH) Price Prediction | GIOM data, July 2023 | Source: IntoTheBlock

Conversely, if the bulls can change the narrative once ETH can break above $3,000, however, as seen above, the 9.2 million investors who bought 3.88 million Ethereum coins at an average price of $3,075 could halt the rally.

But if this resistance level is broken, ETH can rally to a new all-time high around $5,000.


In accordance with Trust Project guidelines, this price analysis article is provided for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased reports, but market conditions are subject to change without notice. Always do your own research and consult a professional before making financial decisions.

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