Ethereum 2.0 stakers face a 36.5% larger loss than ETH spot investors — report

Ethereum investors who invested millions of dollars in Ether (ETH tokens) to be validators on the soon-to launch proof-of-stake network (PoS), are now facing severe paper losses.

By 36.5%, Ether spot traders outperform Stakers

Since December 2020, investors have invested a little more than 13 million ETH in the Ethereum 2.0 smart contract. These investors will not be able to redeem their tokens until the 10% yield is reached.

Surprisingly, 62% of Ether tokens were deposed before the price reached $4,930 in November 2021. According to Glassnode, 38% of the remaining Ether tokens were deposited following the record high.

Total value of Ethereum 2.0 staked. Source: Glassnode

The total value of the Ethereum 2.0 smart contracts reached $39.7 billion in November 2021. This was due to 263,918 network validateators. Despite an increase of 5 million ETH over the past eight months, the value now stands at $14.85 billion.

At an average price $2,390, Ethereum 2.0 stakers made deposits of ETH to PoS contracts at a cost of $2.390. Glassnode stated that ETH stakers now have a loss of 55% due to ETH’s 75% collapse since November 2021.

Extracts from the report:

Comparing this to the Realized price for the entire ETH supply, 2.0 investors are currently suffering 36.5% more losses than the general Ethereum market.

ETH 2.0 total value staked realized price versus market price. Source: Glassnode

Possible bullish or bearish scenarios

The bear market in Ether has also affected Ethereum 2.0 contract flows.

Notably, the average weekly 32 ETH deposit into the Ethereum 2.0 contract fell to 122 a days in comparison to 500 to 1000 per day in 2021. This suggests that investors are reluctant to lock up their ETH holdings in a bear market.

Ethereum 2.0: New deposits Source: Glassnode

Technically speaking, it seems that investors’ concerns are legitimate.

Ether could experience a major collapse in Q3/2022, since it has been following a classic continuation pattern known as the ascending triangle. The chart below illustrates this. ETH’s current price is almost $800. This would be nearly 32% less than it is today.

Daily price chart for ETH/USD featuring ascending triangle setup. Source: TradingView

Cointelegraph reported here that Ethereum is close to switching to PoS after a successful trial, which was held on July 6. This could have ETH holding onto its interim support of $1,070 as shown in the chart below.

Weekly chart of the ETH/USD exchange rate. Source: TradingView

ETH could recover to its 200-week exponential moving mean (the blue wave), if it is paired with an “oversold” relative strength index (RSI reading below 30). This would represent a 35% plus rally in ETH’s price compared to today.

Related: What does a bear market ‘cleanse” actually mean?

Similar setups can be seen in the ETH/BTC tool, which tracks Ether’s strength against Bitcoin (BTC). According to Fibonacci retracement graph levels, Ethereum’s successful switch from PoS could have seen ETH rise above 0.057 BTC and then move upwards to 0.06 BTC.

Weekly price chart for ETH/BTC Source: TradingView

ETH’s main threat is still macro risk, namely the Federal Reserve’s possible 75 basis point rate increase in July.

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