Ethereum 2.0 Deposit Contract Crosses 3 Million ETH

Ethereum 2.0 Deposit Contract Crosses 3 Million ETH

Ethereum 2.0, the network upgrade of ETH, has crossed 3 million ETH under its deposit contract as the Ethereum community extended their support for ETH 2.0. The total value of ETH locked under the network upgrade jumped above $5.4 billion after the recent jump in the price of the world’s second-largest cryptocurrency.

Ethereum 2.0 started its journey in December 2020 with the launch of Beacon Chain. ETH 2.0 deposit contract crossed 1 million ETH within the first week of its launch. The Ethereum network has started its journey to shift from the current proof-of-work network to a more efficient and improved proof-of-stake network.

The ETH price is up nearly 150% since the start of 2021. The world’s second-largest digital asset registered an all-time high of $1,870 on 13 February as the total market cap of Ethereum jumped above $210 billion. As of writing, the cryptocurrency is trading near $1,750 with a total market cap of $200 billion.

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The CME Group launched Ethereum Futures Contracts last week and the Group reported trading of 388 ETH contracts with a total trading volume of $33.6 million on its first day. Additionally, ETH’s on-chain network activity has increased significantly in the last few months as now the network is settling more value than BTC.

Ethereum Inflows

Finance Magnates earlier reported a significant jump in Ethereum-related weekly crypto inflows. ETH accounted for nearly 80% of the total $245 million crypto inflows during the first week of February 2021. Institutional demand for the world’s second-largest crypto-asset jumped substantially since the launch of Ethereum 2.0. Now, Grayscale has 3.13 million ETH under management with a total value of $5.67 billion. The CEO of Grayscale Michael Sonneshein reported growing interest in Ethereum-related investment products.

Ethereum 2.0 received strong support from the crypto community as staking participants are hopeful for an improved version of the network in the form of ETH 2.0. The current transaction fee of ETH is a big issue for the users, the network upgrade aims to address the issue of large transaction fees and the number of transactions per second.

Ethereum Price Prediction: Upward Momentum to $2,000 Intact

Ethereum price nosedived by more than 10% in the overnight session after a broad sell-off in cryptocurrency prices. The ETH price has dropped by more than 4% while Bitcoin, Cardano, Ripple, Litecoin, and Polkadot have fallen by more than 5% in the past 24 hours. This brings its total market cap to more than $200 billion.

Ethereum News: ETH suffered a harsh reversal after the price soared to an all-time high of $1,874 on Saturday. Similarly, Bitcoin rose to its all-time high of $49,700 after BNY Mellon, one of the biggest banks in the US started offering crypto custodial services.

Therefore, since there was no major news, the current weakness is mostly because of profit-taking. Furthermore, ETH price has already risen by more than 1,000% from its lowest level in 2020. So, what next for the Ethereum price?

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ETH price technical outlook

In an article earlier today, an analyst said that the Ethereum price was on track to decline by more than 35% to $1,040. He focused on the four-hour chart, which has developed a rising wedge pattern. However, this thesis seems to be premature since the chart he used showed that the wedge was not close to its tipping point.

Now, turning to the daily chart, we see that the ETH price fell to an intraday low of $1,661. This level was not by accident. In fact, it was along the ascending pink trendline that connects the lowest levels since January. In fact, the price has formed an ascending channel. Therefore, in the near term, there is a possibility that it will bounce back to $1,950, which is along the upper side of the channel. This is in line with my earlier prediction that ETH will soon rise to $2,000.

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ETH price chart

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Ethereum fundamentals signal $2,000 ETH price is closer than it seems

In the early hours of Feb. 15, Ether (ETH) price plunged to $1,660, followed by a 9% recovery within 10 hours. The move triggered $280 million in futures contracts liquidations, indicating excessive leverage from longs.

Although the initial anxiety regarding CME’s ETH futures launch on Feb. 8 seems to have faded, sustained excessive transaction fees might have undermined investors' confidence. Nevertheless, the fundamentals behind Ethereum remain solid, indicating ETH price should promptly recover from eventual dips.

Ethereum median transaction fee, USD. Source: BitInfoCharts

Even though the above metric might be interpreted positively, not every user can afford a $12 fee. A simple token swap on decentralized exchanges (DEX) can cost hundreds of dollars in gas fees, leaving small traders no choice but to abandon the network.

Multiple proponents are testing sharding and layer-two solutions to circumvent this issue, including Skale and Optimistic Network. Eth2 will use sharding to split the blockchain into several parts and increase the number of transactions the network can process at once.

Total value locked remains in an uptrend

The phenomenal growth of total value locked (TVL) in decentralized finance projects can’t be disregarded. The adjusted metric attempts to clean readings from ETH price increases, therefore providing more reliable data.

Adjusted total value locked, USD. Source: DappRadar

As depicted above, the 34% increase over the past 30 days falls in line with ETH’s 38% gain in February. Regardless of the transaction fees, there is still value created by automated market-making pools and staking mechanisms.

To better understand whether the recent crash reflects a potential local top and subsequent downtrend movement, one needs further data. Besides price action and technical analysis, investors should also gauge on-chain metrics such as network use. An excellent place to start is analyzing transactions and transfer value.

ETH/USD price (line) vs. transactions and transfers (area). Source: Coin Metrics

Coin Metrics data shows the 14-day average transactions and transfers rallying above $9 billion in daily transactions, a 32% increase from the previous month. This significant increase in transaction and transfer value signals strength and suggests that Ether’s price is sustainable at the current levels.

Exchange withdrawals indicate long-term holding

Although there is no consensus among analysts on the short-term price impact of exchange withdrawals, its effect is either neutral or bullish. The opposite movement, large continuous inflows, is the only bearish scenario, as it indicates holders' willingness to sell.

ETH/USD price (black) vs. exchanges ETH reserve (red). Source: CryptoQuant

From Jan. 1 to Feb. 15, roughly 600,000 ETH was withdrawn from exchanges. Regardless of if whales are transferring to cold wallets or putting Ether into the DeFi ecosystem, those coins are less likely to be sold in the short term.

Considering this movement happened while Ethereum made a $1,870 all-time high, the indicator indicates holders' confidence.

To conclude, based on both on-chain metrics and trading perspective, there are encouraging signals that $2,000 is within reach and that dips are being bought up aggressively.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.