Ethereum is one of the most popular cryptocurrencies in the world, second only to Bitcoin in terms of market capitalization and engagement levels from users. However, it was still affected by the significant price changes of 2022, when the bear market and crypto winter reigned supreme in the marketplace. It was a difficult time, and many traders left the market at that point. But the effort of those who chose to remain has been amply rewarded since January 2023, when the prices began to return to their previous levels.
Despite the steady progress, regulatory pressures created further uncertainty in the market, and although things have improved, investors are still waiting for the breakthrough that will change how the market grows. In the meantime, most investors are looking towards the evolution of staking on the Ethereum blockchain with increasing interest.
Rising figures
The total amount of staked Ethereum has continued to grow since the introduction of the Shanghai upgrade. Interestingly, the purpose of this update was to allow crypto users to withdraw cryptocurrencies. While in the beginning, it followed this exact principle, and many traders began to withdraw their staked coins, things have been different since then. Now, the amount of staked ETH far exceeds all of its previous elevated figures.
The reason for this is simple, staking allows investors to guarantee a steady revenue, compared to enabling liquidation. Currently, there are around 27.03 million coins on the blockchain, showing a 40% increase since Shapella was launched in April. It now appears that the figures will continue to grow, especially as the blockchain navigates a rather rough patch until it is completely recovered.
Long-term trend
Within the cryptocurrency environment, trends don’t usually last very long. The market is better known for innovation, development and change rather than commitment to a single tendency. However, long-term movements do, in fact, exist, and they’re crucial for investors to understand in order to ensure they can protect their list of holdings.
The Shanghai upgrade marked the end of a two-year-long wait for investors, as the highly anticipated update had long been expected by those partaking in the blockchain. It marked the introduction of a complete transition from a proof-of-work blockchain system to a proof-of-stake protocol. The new algorithm is also believed to be significantly more sustainable and environmentally friendly by being more energy-efficient and reducing the amount of resources that go into the mining process.
Individual holders, who had so far hesitated to deposit capital, became confident that they could now stake as much as they wanted and would see the associated results. Although withdrawals were widespread initially, when the unstaking mechanism was first introduced, the requests were soon replaced with an uptick in the number of deposits.
According to data, over 20% of Ethereum’s currently circulating supply has been staked. This contrasts with ETH’s lowering exchange supply levels, as the reserves have dropped since Shanghai. Only 18% of all tokens constituted the liquid supply. Many believe that all these changes could indicate a new long-term trend is underway for the market. Even though the staking rewards have diminished recently, the craze surrounding staking continues.
Liquid staking
There’s also a new trend creating quite a lot of hype in the Ethereum ecosystem at the moment. The Shanghai upgrade created much better opportunities for those seeking liquid staking. The LSTs, or liquid staking tokens, allow users to put capital towards staking ventures while also retaining the ability to use the same assets as part of a DeFi transaction. This makes them particularly lucrative and has even led some researchers to speculate that LSTs might soon replace Ether on its native blockchain.
However, others aren’t convinced and believe that Ethereum’s trustworthiness and relative stability, when compared with the other assets from the crypto environment, will ultimately weigh more in the grand scheme of things. Yet, it’s an exciting change to observe. The higher yield potential naturally makes liquid staking tokens highly popular. LSTs have the most significant share of the Ethereum staking market, nearly 40%.
This is decidedly impressive since back in December 2020, when staking first became a thing, liquid staking tokens didn’t even exist.
ETFs
ETFs have also seen more prospects recently, and the number of exchange-traded funds has constantly increased over the past months. However, most investors aren’t confident that the asset class ultimately has any chance of getting the seal of approval from the Securities and Exchange Commission.
Recently, there has been a wave of applications, but most experts estimate they will be withdrawn after a few weeks. Most of them, nearly 80%, are estimated to have been removed mainly on a whim. However, others still expect that if the path of least resistance is taken, then it will instantaneously lead to simultaneous approvals for the active fillings.
AI predictions
Predictions are pretty popular in the cryptocurrency environment, and there’s no surprise as to why that’s the case. Transactions can be quite challenging when prices are constantly shifting and sometimes even experiencing significant shifts in a short time. However, analysis and predictions have always been controversial since, although many investors base their trading strategies on them, it’s challenging to know which one is more likely to come true. Therefore, they can also lead to a loss of capital, which can be highly detrimental to the prospect of creating a stable portfolio.
However, there’s a way to abate some of these worries by generating an artificial intelligence prediction. Since the AI uses data and compares figures in order to reach an objective answer, the projections it offers seem far more reliable. However, the results were inconclusive, and the algorithm admitted that predicting how exactly the prices will change, especially over a longer time, such as until the following year, is difficult. However, despite being unable to predict how the expenditures will change exactly, the AI confirmed that staking will undoubtedly play an essential role in the development of the Ethereum blockchain.
Although the market is still recovering following the difficult time it experienced in 2022, progress is plain to see, and there’s no doubt that things will continue to improve shortly.
