Ethereum Price Forecast: ETH could see renewed demand if staking issuance drops — Grayscale

Ethereum price today: $2,280

• ETH faces increasing net issuance as the current staking environment offers huge marginal benefits to stakers at almost zero cost.
• Reducing staking rewards could boost ETH's price by curbing rising inflation and improving scarcity.
• ETH risks losing the 50-day EMA support.

Ethereum could control its rising supply growth, boost scarcity and strengthen its store-of-value thesis by reducing staking rewards, according to Grayscale in a research report on Tuesday.

The asset manager noted that ETH's net issuance has been on the rise as base transaction fees, which are usually burned to offset new issuance, have declined following a series of network upgrades that pushed more economic activity to Layer 2 (L2) platforms.

While the Ethereum Foundation (EF) recently rerouted its roadmap to prioritize L1 scaling, competition with other top blockchain networks means developers will continue to optimize for lower fees.

"This will likely mean relatively low L1 transaction fees for the foreseeable future, implying lower token burn, and more net supply growth," wrote Grayscale Head of Research Zach Pandl.

The report also highlighted that the current staking environment offers huge marginal benefits to stakers at almost zero cost. In the early days of Ethereum's proof-of-stake transition, staking was illiquid, which meant it carried a risk premium. However, the introduction of liquid staking tokens (LSTs), staking in exchange-traded products (ETPs), and corporate ETH treasuries evaporated much of that premium, prompting more investors to stake their tokens.

"Staking is necessary for the Ethereum protocol to function, but very high levels of staking may be counterproductive," the report stated.

Pandl noted that such conditions could continue to push net issuance higher, but with little improvement to network security. It could also concentrate staking activity among a few players through staking service providers, introducing critical tail risks.

He added that while some have argued that staking rewards enable ETH to be valued based on cash flows like bonds or stocks, the process resembles a company that pays dividends by issuing new shares, diluting shareholders.

"One solution could be a shift to a reward model that only incentivizes staking up to a certain point," wrote Pandl.

The report emphasized that such a move could improve ETH's price by reducing net issuance and boosting scarcity. "Moreover, by reducing network tail risks and containing long-run inflation, the changes could increase demand for unstaked ETH as a digital store of value," Pandl noted.

Grayscale also highlighted that ETH's volatility has attracted investors more than staking rewards, claiming that one day of price volatility is equal to the annual staking rate of 3%.

On the contrary, Dima Gusakov, tech lead at liquid staking protocol Lido, argues that reducing ETH's staking issuance could crash DeFi total value locked (TVL) and ultimately hurt Ethereum.

Meanwhile, the Ethereum Foundation unstaked 21,270 ETH from Lido on Monday.

Ethereum Price Forecast: ETH risks losing 50-day EMA

Ethereum has recorded $71.2 million in liquidations over the past 24 hours, led by $65 million in long liquidations.

On the daily chart, ETH is maintaining a capped tone, trading below the 20-day Exponential Moving Average (EMA) near $2,313 and well below the 100-day EMA around $2,352, even though it still holds marginally above the 50-day EMA at $2,274. This configuration hints at a corrective phase within a broader uptrend, with sellers exerting pressure while buyers defend the nearby 50-day EMA.

The Relative Strength Index (RSI) slipping below the 50 line and the Stochastic Oscillator (Stoch) hovering near the lower third around 31 both suggest fading momentum and the risk of further downside unless price can reclaim the short-term EMA cap.

On the downside, initial support is aligned with the 50-day EMA at $2,274, followed by a more solid floor at the horizontal level of $2,211, with additional demand expected near $2,107 and then $1,909 if selling extends.

On the topside, immediate resistance emerges at the 100-day EMA at $2,352 and the nearby horizontal barrier at $2,388. Only a sustained break above this cluster would ease the current bearish bias and open the way toward higher resistances at $2,746.

(The technical analysis of this story was written with the help of an AI tool.)