Uncertain outlook for ETH with no sign of bull rally in the near term

Blockchain analytics provider CryptoQuant has predicted a potential sell-off event for Ethereum (ETH) due to negative fundamental factors. The first potential catalyst for such an event is the increase in inflows into the ETH 2.0 deposit contract, which currently holds 12% of the total ETH supply. While the amount of ether locked in the contract has been steadily increasing, the number of new depositors has been decreasing. This could potentially lead to a sell-off when the Shanghai hard fork, scheduled for March 2023, allows for the withdrawal of staked ETH.

The second factor that could contribute to a sell-off is the declining balances of ether on centralized exchanges. As the Shanghai upgrade approaches, analysts at CryptoQuant believe that it could lead to a major sell-off of ether due to staked ETH withdrawals. At present, there is approximately $18.9 billion worth of ether staked with the network.

The overall outlook for the ETH ecosystem is uncertain, with no signs of a bull rally in the near term. The U.S. Federal Reserve's decision to raise interest rates could also impact the cryptocurrency market. However, some believe that the positive changes to ether's tokenomics brought about by the Merge upgrade could help it outperform bitcoin and the broader market in the future.

At the time of writing, ether was trading at $1,185, which is nearly a 4.5% drop over the last 24 hours. It is unclear whether ether will experience an epic dump or a bullish trend reversal. The No. 2 cryptocurrency by market cap, ether has experienced significant price fluctuations in the past. The future of the ETH ecosystem depends on a variety of factors, including technological upgrades, market demand, and macroeconomic conditions.

CryptoQuant's analysis suggests that there may be negative fundamental factors that could impact the price of ether in the near term. While it is impossible to predict exactly how the market will behave, it is important for investors to stay informed and make decisions based on their own risk tolerance and investment goals. In any case, it is always advisable to diversify one's portfolio and not to invest more than one can afford to lose.