How 12.59 million ETH out of circulation can affect Ethereum price

The number of Ethereum tokens staked in the Eth2 contract has reached a new all-time high. Despite the key milestone, analysts fear further decline in ETH price, on account of "bear pennant" structure. 

Ethereum price at risk despite new milestone 

The Ethereum network achieved the highest volume of ETH staked in its deposit contract. This is considered critical to the token’s ciculating supply. Indeed, an increase in the quantity of ETH tokens staked on the Eth2 contract is considered bullish as it reduces the amount of tokens available to sell and contributes to the "shortage" across exchanges. 

Roughly 12.59 million Ethereum tokens, worth nearly $26.6 billion, have been depsited in the Eth2 contract, marking a new all-time high.

The implementation of a burn mechanism and the transition to proof-of-stake are considered the two critical ways in which Ethereum can become deflationary. 

Based on data from the burn portal, over 2.3 million ETH have been destroyed so far. When taking into consideration the tokens locked, more than 14.90 million ETH have been taken out of circulation, reducing the token’s supply by 12.31%. 

The decline is expected to positively influence the Ethereum price in the long-term. Still, analysts believe that ETH may have more room to go down in the short-term. 

Netflow across exchanges is the difference between inflow and outflow. This indicator has been positive for over a week, which implies there is a higher volume of Ethereum reserves across exchanges due to a spike in inflows. 

The availability of a large quantity of ETH on an exchange platform increases selling pressure on the altcoin, and typically pushes prices lower. As long as the bars on the chart remain green, traders must remain cautious of a another price downswing. 

ETH exchange netflow - all exchanges 

Moreover, CryptoVizArt, a leading crypto analyst, believes Ethereum formed a bear pennant. This is a bearish continuation pattern that anticipates a 25% correction in Ethereum price if validated. 

The analyst argues that the Ethereum price could invalidate the pessimistic outlook if it penetrates horizontal resistance at $2,450. Such a move could confirm the completion of the altcoin’s downtrend.