Market sentiment for Ethereum took a dive today as users on Myriad now think there’s a 62.5% chance ETH slips to $2,500 before it sees $4,000 again.
Myriad, a prediction market owned by Decrypt parent company Dastan, previously showed Ethereum bears and bulls were equally split on ETH’s next move as recently as Tuesday, Jan. 20. And just a day prior to that, Myriad traders had placed 55% odds on Ethereum bouncing back to $4,000, which would mark a nearly three-month high.
At the time of writing, Ethereum was trading for $3,008.04 after having dropped 10.6% in the past week. Earlier in the day, ETH dropped all the way below $2,900, according to price aggregator CoinGecko.
But even if there’s short-term pessimism about ETH’s price, there are signs that longterm sentiment hasn’t dramatically shifted for network participants. Earlier this week, on Jan. 19, the Ethereum validator queue for those waiting to exit went to zero.
The Ethereum network switched from proof-of-work, like Bitcoin, to proof-of-stake in 2022. The consensus model requires validators to stake 32 ETH as a pledge that they will propose and attest to blocks of transactions accurately as a security measure. If the hardware they’re running experiences significant downtime or there’s evidence of bad behavior, they can have a portion of their 32 ETH slashed.
Becoming an Ethereum validator is not a one-way street, but it is one with a speed limit. The network meters how quickly new validators join and how quickly existing ones can leave to make sure a mass exodus doesn’t destabilize the network’s security. But on January 19, there were momentarily no validators looking to unstake their 32 ETH.
There’s always a chance that some validators will need to liquidate a portion of their holdings if the price takes a dive, Curve and Yield Basis founder Michael Egorov said in a note shared with Decrypt. But that tends to be rare, he added.
More recently, the exit queue has ticked up to 94. It’s still minuscule in comparison to the 2,816,860 potential validators waiting to join the network. The current wait time is now just over 48 days.
But there can still be risks involved if validators use their staked ETH as collateral, Egorov said.
“Fortunately, there is a very good liquidity for staked ETH on secondary markets. But still, selling those assets instead of unstaking them does create price pressure,” he added.
“Arbitrage traders take that discount, but contribute to the increase of exit queue at the same time. So, in short, the growing exit queue is a consequence of bearish dynamics on the market. This is a temporary state of things, and I don’t think it has enough significance to draw any fundamental conclusions about structural shifts yet,” he said.
