• Ethereum (ETH) just surged above $2,100 for the first time since May 2022 amid positive post-Shapella update changes in the ETH supply.
• On-chain data reveals that Thursday saw a near 100,000 jump in the number of ETH tokens staked on the Ethereum blockchain.
• Investors are expected to put their tokens into staking contracts to benefit from yield.
Ethereum Reaches New High After Shapella Upgrade
Ethereum (ETH) recently surged above $2,100 for the first time since May 2022 due to positive changes following the Shapella upgrade. The upgrade enables staked ETH and ETH-denominated staking rewards to be withdrawn from staking smart contracts for the first time since December 2020.
On-chain Data Reveals Increase in Staked ETH Tokens
On-chain data shows that Thursday saw a near 100,000 increase in the number of staked ETH tokens on Ethereum’s blockchain – an indication that investors see this as a sign to stake their Ether tokens rather than withdrawing them. This increase in locked up tokens improves Ether’s scarcity leading to higher prices.
Yields Expected To Rise With Staking
Now that withdrawals have been enabled, more investors are likely to put their Ether into staking contracts for yield benefits. Yields of 4-5% can be expected from liquid staking protocols such as Lido’s stETH token but this will decrease with more tokens being locked up in these protocols. As of now, 18.25 million ETH is currently locked up in these contracts which amounts to 15% of its total supply of 120 million coins.
Deflationary Effects On Prices
The deflationary effects on prices due to locking up more coins is likely providing an upside boost for Ether prices as well as relief from unstaked coins entering circulation and causing selling pressure on markets.
The successful implementation of Shapella has provided bullish dynamics for Ethereum’s price with more investors looking towards taking advantage of yields through staking contracts instead of cashing out their rewards immediately despite fears of increased sell pressure initially voiced by analysts.