Macro investment strategist Lyn Alden is naming an overlooked factor that could catalyze Ethereum’s surge (ETH) in 2022.
In a new interview on YouTube channel Investing Made Simple, Alden explains why the amount of ETH locked in the Ethereum 2.0 staking contract serves as a bullish indicator for the second-largest crypto asset by market cap.
[adinserter block="1"]“The thing I’m watching is the Ethereum lock-up contract. They launched the Beacon Chain about a year ago, and they’re doing that staking contract, and that’s one-directional. Once you lock in coins, they’re there until either something changes or until the merge happens. So one thing I’ve been looking at is that Bitcoin’s coming off exchanges pretty rapidly, but Ethereum’s coming off exchanges even a little bit more rapidly partly because it’s going into that contract.
Basically, you have an illiquid supply forming and as long as that persists, that’s a pretty strong bullish variable. I mean there’s over 8 million ETH in that contract. I think we’re getting close to 9 million. I haven’t checked in maybe a couple weeks, and so overall that’s a bullish catalyst.”
Distributer ledger explorer Etherscan shows that crypto investors have locked up 8,793,458 ETH worth $35.43 billion in the smart contract. Those depositing their ETH in the smart contract seek to be validators of Ethereum’s next iteration.
However, the investment strategist also points out that Ethereum could see a sell-off event once the trapped ETH tokens get unlocked.
“I think that once that gets merged and unlocked, that could be a liquidity event. Some of those coins have pretty sizable profits, and some people might want to take profits off the table, so I’d be more uncertain after the Merge. Ironically, it could be one of those sell the news events, where a lot of anticipation builds up to it and then maybe that’s kind of a catalyst to cool off for a period of time.”
The merge is a highly-anticipated event for Ethereum as the upgrade represents the transition to a proof-of-stake consensus mechanism. The event is expected to take place in Q1 or Q2 of 2022.
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