Ethereum (ETH) prices are up about 18% from their June 2023 lows, driven by an increase in ETH staking and massive withdrawals from centralized cryptocurrency exchanges such as Binance and Coinbase.

As of June 25, ETH is changing hands at $1,912 and has remained stable over the past two days but is trading in a bullish pattern after a sharp rally this week.

Further buoyed by fundamental factors, traders are confident that prices could rise further beyond immediate liquidation levels, including the April 2023 high of $2,100.

More Ethereum Staking

According to Etherscan data, there have been over 216,000 transactions with users staking over 25.5 million ETH at the spot rate, valued at over $48.9 billion. Notably, this trajectory has been steadily rising, indicating support from the broader Ethereum community and confidence in the state of the network.

Ethereum recently switched from a proof-of-work to a proof-of-stake consensus algorithm, meaning that instead of relying on miners, who require energy-intensive equipment to confirm transactions and secure the network, the blockchain will instead rely on validators.

These validators must stake at least 32 ETH in their nodes and be plugged into the network to have a chance to validate transaction blocks and receive blockchain rewards of 2 ETH. The Ethereum network distributes block rewards and block fees every 13 seconds on average.

On-chain data shows that validators have staked an average of 32.18 ETH, and as of writing on June 25, the number of validators exceeds 630,000.

This number has been rising steadily over the past few months as the amount of ETH staked increases, even after the latest Ethereum Shapella upgrade. In this hard fork, Ethereum allowed validators to unlock their tokens for the first time since the launch of the first phase of the beacon chain in late 2020.

Despite expectations of a price drop as some validators unlock their tokens and sell for cash to realize capital gains, the number of Ethereum stakers has been increasing, further strengthening the network.

Withdrawing ETH from centralized cryptocurrency exchanges

As ETH stakers increase, the circulating supply decreases with additional supply. The increase in withdrawals from centralized exchanges further boosts trader confidence. According to Glassnode, the amount of ETH held on centralized exchanges is at a historical low.

The move follows the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Binance and Coinbase, two of the world’s largest cryptocurrency exchanges by customer numbers and trading volume. As a result, some cryptocurrency holders were spooked into withdrawing their coins from these exchanges and depositing them into non-custodial wallets they controlled.

Withdrawing tokens from cryptocurrency exchanges is generally interpreted as bullish. Although Coinbase and Binance have said they will defend themselves against regulators, it remains to be seen how ETH prices will react in future trading.