Will the reduction in the number of Ethereum whales affect price expectations?

Cryptocurrency assets have been under pressure from the macro environment recently. Ethereum, the second-largest cryptocurrency by market capitalization, fell nearly 5% in the past week, falling below the $3,000 mark . ETH has depreciated by more than 40% since its all-time high in November last year, and many analysts have lowered their price expectations for ETH compared to previous forecasts.

In October last year, the Finder.com report predicted that ETH would rise to $5,144 by the end of 2021. However, the current price is far below the predicted price. Currently, Finder.com has lowered its expectations for ETH prices, predicting that the price of ETH will be $6,500 by the end of 2022, with a target price of $10,810 in 2025 and a target price of $26,338 in 2030. The report pointed out that "the expert group's price forecast for ETH by 2030 has been significantly lowered. The prospects for price growth in the cryptocurrency market are severely affected by the tightening of international regulations and the decline in macro-financial markets in early 2022."

Daniel Polotsky, founder of CoinFlip, is more pessimistic. He believes that "due to the performance of competitors, the price of ETH will be difficult to exceed $4,000 by the end of 2022. It is also important to note that ETH's current utility depends on the success of second-layer solutions, such as Polygon (MATIC), which will extract most of the network value from ETH." In 2021, Polygon has developed into an integral part of the Ethereum ecosystem. As MATIC has begun to expand on its own, analysts are concerned that it may pose a competition to ETH in the future. Comparing the price performance of ETH (+62%) and MATIC (+1394%) over the past year, this concern is not unreasonable.

ETH’s high transaction fees have recently dropped. On February 13, fees hit their lowest level since July last year. According to Santiment, the drop in fees is due to the recent price depreciation experienced by ETH, as well as a drop in transaction demand.

The number of whales on the ETH chain has also dropped significantly, indicating that large ETH holders may be exiting on a large scale. Addresses holding more than 1,000 ETH have hit their lowest point since 2018.

More companies will participate in the ETH consensus layer

On the other hand, institutions that are optimistic about ETH are also supporting the development of the ETH network with actions. Ether Capital, a listed company headquartered in Canada, has once again increased the stake of 10,240 ETH (about 30 million US dollars) for the beacon chain. It is reported that the company's total assets invested in the beacon chain network have reached 60 million US dollars.

Ether Capital attracted media attention in 2021 when it became one of the first public companies to stake millions of dollars on the ETH beacon chain. As part of its financial strategy, the company is determined to support the development of the network and its Web 3 ecosystem and make it its investment focus. Ether Capital has a portfolio of more than 44,061 ETH and plans to allocate at least 30,000 ETH to ETH 2.0 staking, accounting for 65% of its total ETH, which shows that the company is optimistic about the development of the Ethereum consensus layer.

To achieve this goal, Ether Capital has entered into a partnership with Figment to build and run its validator infrastructure. Therefore, it is not only an investor in Ethereum's migration to PoS consensus, but also a direct contributor to network security. In addition, the company will convert 766 MKR into proceeds, which is about $1.9 million. The funds will be used for "general corporate purposes", such as purchasing stocks or increasing its ETH balance. Based on Ether Capital's ETH balance and MKR balance and its investment in payment API provider Wyre, its market valuation is $166 million.

Recently, Ether Capital CEO Brian Mossoff reiterated his commitment to the ETH ecosystem, saying that the company has staked more than 20,000 ETH, and that most of the company's ETH balance will be staked in the coming months. Ether Capital will firmly commit to its unique strategy of becoming an ETH hoarder and providing validation and security for the ETH network.

Brian Mossoff was interviewed about Ether Capital's involvement in ETH staking, crypto adoption, and plans for 2022. When asked whether ETH staking would interest other public companies, he said, "There is still a long way to go for public companies to hold ETH, but it is foreseeable that more institutions will eventually adopt the asset. At present, the capital market has a soft spot for BTC. However, innovations such as DeFi and NFT have attracted people's attention, and now institutions with young employees are also beginning to pay attention to ETH, which is a good sign."

Data shows that the amount of staked ETH on the ETH chain is 9.52 million ETH, the staking rate is about 8%, and the rate of return is 5% per year. The current beacon chain has more than 294,000 active validators, and the participation rate reaches 97.44%.