Ethereum experienced a drop to as low as $2,100 this week before rebounding, showing a remarkable 25% increase from its lows in August 2024. While there is optimism that prices will continue to rise, surpassing $2,800 and even reaching the psychological milestone of $3,000, other market events could potentially slow down bullish momentum.
Ethereum Network Unlocking Over 143,000 ETH
According to Token Unlocks data, there are hundreds of thousands of ETH queued up for withdrawal today. Blockchain data indicates that validators are preparing to withdraw 143,000 ETH valued at nearly $350 million. Another batch of 212,000 ETH will become available for trading in the near future, potentially exerting more pressure on prices.
As of August 9, Ethereum has a circulating supply of over 120 million, according to CoinMarketCap data. Since Dencun, the network has been inflationary, meaning more coins are not burnt like before.
Validators must stake at least 32 ETH and ensure their nodes maintain a high uptime of nearly 100%. At the same time, according to the network’s consensus rules, validators should not engage in outlawed activities such as banding to approve invalid transactions.
Failure can lead to slashing, where a portion of their stake is taken as a penalty. However, because they must commit to keeping the network decentralized, they receive a portion of the annual staking yield. Additionally, they have the opportunity to validate transactions and receive rewards for their contributions.
The ETH entering the market represents the yield from staking activities, distinct from the regular block rewards distributed approximately every 13 seconds.
While the market anticipates an increase in supply, Token Unlocks analysts suggest that these withdrawals may not immediately result in liquidation. However, if the ETH is sold, the recovery process is likely to be gradual.
Will Bulls Take Over And Force Prices Above $3,000?
There are concerns about potential price movements. Historically, Token Unlocks analysts have observed that prices tend to stabilize when a large number of ETH tokens are unlocked in a short period on the Ethereum network. In the last three months, unlocks ranging from 150,000 to 220,000 ETH coincided with price declines.
On the daily chart, Ethereum is showing signs of recovery. Despite the recent drop to $2,100 earlier this week, the bounce has been significant, though the downtrend persists.
The immediate support level is around $2,600. Further upward movement by buyers, confirming gains from August 8, could lead ETH prices to rally, facing the anticipated influx, and approaching the $3,000 mark.
Feature image from Canva, chart from TradingView
