As the world’s second-largest cryptocurrency by market capitalization, Ethereum has been underperforming compared to its peers, despite a recent recovery in Bitcoin prices. This development has piqued the interest of both investors and observers, considering Ethereum’s foundational role in the flourishing field of smart contracts and the significant number of crypto platforms that depend on its network. Given this scenario, the question that resonates within the crypto sphere is – Why is Ethereum lagging when other altcoins have seen substantial rallies?
Shaping South Africa’s Crypto Future: Ethereum (ETH)
Ethereum’s on-chain data paints an intriguing picture, suggesting an impending ascension for the altcoin juggernaut. This prognosis is rooted in the all-time low of exchange balances and a consistent rise in staking deposits. If investors push past the resistance estimated between R35,416 and R37,280, Ethereum could potentially rise to reclaim the R55,920 mark, offering significant implications for South African crypto enthusiasts and investors.
According to data provided by on-chain market analysis firm Glassnode, the balance of ETH on crypto exchanges has fallen sharply by 12.6% to a new low in the past month. For the uninitiated, a reduction in the supply of a crypto asset on exchanges, indicating fewer assets available for sale, is generally interpreted as a bullish signal in crypto parlance.
Amid escalating regulatory scrutiny on major exchanges like Binance and Coinbase, the net flow volume of deposit and withdrawal transactions of ETH has shown a significant uptick in withdrawals since the beginning of June. This suggests a possible transition of investors towards holding the asset for longer terms, a potential sign of increased confidence in the cryptocurrency’s future performance.
The Ethereum Staking Revolution: Impact on South Africa
Since the Shapella upgrade in April, the number of ETH locked in staking contracts has experienced a marked increase. Presently, more than 23 million ETH, which equates to 19.1% of the total supply, is staked. Glassnode data also indicates that roughly 30% of the total ETH supply, including decentralized finance (DeFi) and staking contracts, is locked in smart contracts. This is an appreciable increase from the 25.5% recorded at the beginning of 2023.
These trends, including the increased withdrawals from exchanges and higher deposits into smart contracts, which reduce the liquid supply of ETH, could positively impact the cryptocurrency’s price. The decreasing supply of ETH in circulation could also stimulate price growth over the long term due to the current burn rules established in the Ethereum network. This might signal an excellent opportunity for South African investors who are interested in long-term gains.
Technical Chart Review and Price Projections
The price of ETH seems to be facing resistance around the horizontal level of R35,416. Based on the ascending triangle formation, the pair has seen higher lows between R35,416 and R37,280, which have acted as technical and psychological resistance levels since November 2022.
A break above the R37,280 barrier could propel ETH towards the 2022 breakout levels around R55,920 quickly. The rising channel formation’s targets also align with these levels.
On the other hand, the ETH/BTC pair seems to be seeking support around the lowest level of 2023, approximately 0.06255 in Bitcoin terms. If sellers manage to push the price below this level, sales might continue down to the support level of 0.05689 BTC.
The recent developments around Ethereum present both challenges and opportunities for South Africa, a nation that has seen increasing interest and investment in cryptocurrencies. As Ethereum evolves and grows,