The second largest cryptocurrency ethereum (ETH) has shown very nice things in the past year. The price has risen to astronomical heights and it has actually caught up quite a bit in recent months bitcoin (BTC) created. According to macro analyst Lyn Alden, there is a signal on the brands that may suggest that this trend will continue into 2022.
ETH staking
In an interview with the YouTube channel Investing Made Simple Alden explains that there is a fairly unnoticed reason that the price of ethereum is going to get a big boost in 2022.
She’s talking about the Ethereum 2.0 staking contract. Here, ether tokens are locked in on a large scale in the run-up to the highly anticipated ETH 2.0 merge. These tokens are fixed until this merge actually takes place sometime in the first or second quarter of 2022.
This merge is actually the long awaited one ETH 2.0 update. At that time, the network will also switch from a proof-of-work to a proof-of-stake consensus model.
According to her, pinning large amounts of ether tokens can act as a kind of catalyst. An illiquid supply of ether tokens is being created by the ETH 2.0 staking contract. Ether tokens locked in here are effectively removed from circulation.
Ether tokens in omloop
Both bitcoin and ethereum are being taken off the major crypto exchanges at a fairly rapid pace. Of course this is a bullish signal, but this effect is made even stronger with ethereum by the fact that part of these ether tokens are thus locked in the staking contract.
According to Etherscan crypto investors currently have some 8.8 million ether tokens locked into the contract. These ether tokens have a market value of no less than $35 billion!
Lyn Alden acknowledges that this huge amount of ether tokens could also pose a potential threat to the ethereum price. As soon as the ETH 2.0 merge takes place, all these pinned ether tokens are released. This massive surge in liquidity would sell-off can take care of.
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