Ethereum (ETH) on-chain data shows multiple whales and validators are preparing to unstake their tokens. The Beacon chain still holds a record number of coins, but some previous stakers are moving their liquidity.
Ethereum (ETH) stakers have started to move their funds, creating a queue for significant withdrawals. The new ETH will be unlocked in the coming days. Unstaking and unlocking tokens may not lead to direct selling, but some of the ETH may still end up on the markets.
Total pending withdrawals reached 246.66K ETH, and more than 7,000 validators are leaving the staking smart contract. Some of the withdrawals may belong to whales, creating more concentrated selling pressure. However, the queue also contains smaller transactions of 0.30 ETH, where end users have staked through other protocols.
Historically, big token unlocks for ETH have coincided with price crashes.
The current queue for withdrawing funds has a sweep delay of 9.2 days, which may further slow down the selling. Overall, churn has decreased as validators entries and exits are near balance.
One of the bigger concerns for large-scale sellers was from Jump Crypto, which is winding down its trading operations. The company unlocked larger ETH tranches, between 11K and 19K tokens. The last on-chain sales from Jump Crypto came on August 7.
The inflows arrive at a time when new ETH burning is slower, adding another 60K ETH in the past few weeks through block production. During current network conditions, the Ethereum network produces more than 18,000 new tokens on a weekly basis, adding more than 10K tokens net each week.
⚠️ Ethereum is facing a significant withdrawal queue ⚠️
Ethereum is experiencing a notable withdrawal from the network. In the next 12 hours, approximately 143k $ETH worth $350m in value will be available for users to withdraw.
There’s also a total of 212k $ETH set for… pic.twitter.com/kKhhmKjntx
— Token Unlocks (@Token_Unlocks) August 8, 2024
At the same time, the Ethereum beacon chain contract still holds more than 49M tokens. More than 39% of the supply is counted as staked based on blockchain data. More than 1.4M addresses are registered as validators, though the addresses of depositors are under 200K. Depositors can lock ETH on behalf of other users, who cannot supply the 32 ETH stake.
Staked ETH in the form of stETH is also key to the DeFi ecosystem. Inflows of stETH reach Aave, Maker DAO and Eigen Layer, while also being used in bridges. For Maker DAO, liquidation risk is relatively low all the way to the $1,665 range, with a big leeway for the protocol even after the recent correction.
Ethereum recovery slows down on fears of selling pressure
Recent data shows ETH is still facing selling pressure. The spot market shows a slight dominance of buyers at current levels, leading to a slow recovery for ETH.
Derivative open interest for ETH is also relatively stable, with $3B on Binance. In the past months, ETH saw slower derivative trading, despite the expectations for its ETF launch.
The overhangs that put pressure on ETH include the Grayscale wallet of 2.33M ETH, as well as remaining tokens from Jump Crypto, ICO wallets, and other whales. The recent price moves broke down the expected narrative of a smooth rally to $4,000 or an even higher price range. For analysts, the current price performance is mostly due to external factors, while Ethereum itself is not in decline.
ETF flows data shows ETHE by Grayscale is still a net seller, liquidating 8.46K ETH. The biggest buyer is still BlackRock, adding 5K ETH to its fund. The ETF took roughly 30K ETH net from the market in the last three days, but days with outflows are still prevalent.
As of August 9, Jump Crypto also moved another $29M in ETH, with the potential to bring the price to a lower range. In the past days, Jump Crypto liquidated around $2M in ETH every hour, showing there was still demand in the market to absorb the inflows.
ETH recovered to $2,651.58 ahead of the weekend, bouncing from lows under $2,200. ETH survived a 34% drawdown, and is still facing headwinds. ETH dominance is up to 15%, after reducing to 14.6%.
Other sources of pressure against Ethereum come from still relatively high fees, which rise to $40 during busier days. At the same time, DEX trading has shifted to L2 networks, which continue to increase their fees. Solana (SOL) also competes heavily with Ethereum, though still with smaller value locked.
Cryptopolitan reporting by Hristina Vasileva
