Completion Ethereum Price Soars as Dencun Upgrade Nears Finish Line, Aims for $2,500


On February 6th, Ethereum (ETH) price remained steady above $2,300 while Bitcoin (BTC) and the rest of the crypto market faced a setback of $37 billion.

Recent on-chain data trends reveal that the increased staking inflows for ETH 2.0 ahead of the upcoming Dencun upgrade have contributed to the positive start of February, despite the overall bearish headwinds in the crypto market.

In contrast to the market trends, Ethereum price has outperformed in February, making significant gains in the first five days of February, while Bitcoin and the rest of the crypto market stumbled. During this period, ETH price rose from $2,241 to $2,326, while the total crypto market capitalization dropped by 2%, losing $37 billion. This indicates that Ethereum is currently performing better than the overall market trend.

One of the main driving factors for Ethereum’s relative strength in February is the increased deposits on the ETH 2.0 beacon chain. This is also supported by rumors surrounding the ETH spot ETF, but the recent uptick in deposited coins is the primary driver.

Ethereum 2.0 staking has become a crucial aspect within the Ethereum ecosystem since the Shappella upgrade completed the Proof-of-Stake transition in April 2023. Recently, Vitalik Buterin proposed a series of network improvement proposals, including a gas limit increase. Additionally, the highly anticipated Dencun upgrade, also known as Cancun-Deneb, which is set to be completed on February 7th, focuses on increasing scalability.

These positive network developments have increased stakeholder confidence in recent weeks. The Staking Inflow metric by Cryptoquant tracks the daily number of coins deposited in ETH 2.0 beacon chain contracts. The chart shows that on January 31st, there were 143,103 ETH (~$329 million) staking inflows, and on February 2nd, there were 137,472 ETH, the highest recorded since December 3rd, 2023.

Staking deposits are crucial for the security and functionality of any PoS network. When there is a noticeable increase in staking during a market downturn, it suggests that investors have a positive long-term outlook for that cryptocurrency ecosystem. Instead of selling, Ethereum holders are staking to earn passive income, which temporarily reduces selling pressure by decreasing the number of coins readily available for trading on exchanges. This partially explains why ETH price has outperformed the market in February so far.

The timing of the staking deposits also suggests that stakeholders are confident about the upcoming Dencun upgrade’s positive outcome.

In summary, increased staking and positive sentiment surrounding network upgrades have contributed to the recent ETH price action. With these factors still in play, Ethereum could potentially reach the elusive $2,500 price target in the coming days. However, there is significant short-term resistance at the $2,350 level.

IntoTheBlock’s global in/out of the money data shows that there are 1.34 million holders who acquired 4.68 million ETH at an average price of $2,358. If the price approaches their break-even point, they may be tempted to sell, potentially hindering the bullish prediction. However, if the bulls manage to break through the resistance, it could open the doors for a $2,500 retest.

On the other hand, if the bears push the price below $2,000, it could negate this optimistic prediction. However, as shown by the IntoTheBlock data, there is a strong support buy-wall at $2,040.

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