Some interesting data concerning Ethereum was recently provided by the Santiment data-gathering website, which showed that the cryptocurrency’s selling pressure has reduced. In fact, the data indicated that the percentages of the cryptocurrency stored by major exchanges had reduced to levels that haven’t been seen since 2018. However, it appears that the cryptocurrency’s price seems to be doing quite well, as it has reached $450 already. Market analysts and observers have pointed out two primary reasons why Ethereum reserves seem to be shrinking on crypto exchanges. First and foremost, it is an indication that most of ETH holders are just not interested in selling their holdings at the existing price.
Secondly, there are also some high expectations associated with the growth of Ethereum, as ETH 2.0 draws nearer and it is expected to launch on the mainnet within the next month. Since it is going to be a prominent network upgrade, there are a lot of high expectations associated with ETH 2.0, as it will boost the capacity of the platform in processing transactions. Presently, around 15 transactions per second can be processed by the Ethereum blockchain. However, this number will skyrocket once ETH 2.0 takes place and the blockchain’s capability will be enhanced so much so that it will be able to process more than 3,000 transactions per second.
In fact, the might be able to do more than that in the future. The Ethereum community is well-aware that it is essential for the cryptocurrency to boost its transaction processing capacity, as it handles decentralized applications, as opposed to Bitcoin. When decentralized applications experience an increase in user activity, it is possible that ETH fees may jump to very high levels, which can make it immensely difficult to send transactions. Moreover, the concept of staking is what takes the attention here, as it will reduce the supply towards exchanges.
A process referred to as ‘staking’ would be included in the ETH 2.0 upgrade, which would enable users to deposit 32 ETH on the platform and processing Ethereum transactions on the blockchain would become possible in this way. Consequently, these Ethereum users will be entitled to receive a yearly return of 15% from their holdings. Users interested in staking their 32ETH holdings will have to transfer them to the ETH2 deposit address. They have to keep their stake in order to be eligible for receiving the 15% returns at the end of the year.
They will be disqualified from receiving the returns, if they spend or send their ETH holdings. However, before ETH 2.0 can be launched, a total of 453,733 ETH deposits have to be made to ETH2 before December 1st, 2020. Currently, the deposits have reached 70,555 ETH. The number of exchange reserves have declined because ETH has been steadily flowing into the eth2 address. As Ethereum reserves continue to depreciate, Santiment analysts believe there is a small chance that it could result in a huge whale sell-off. ETH is currently maintaining price levels of $450, which it had rejected in the past.
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