Validators may withdraw 1,400,000 ETH in the next few days

Nansen data shows that Ethereum’s long-awaited Shanghai and Capella upgrades were launched on April 13, and 142,425 ETH were withdrawn 40 hours later.

During the brief moment when Shapella was activated on April 12, deposits to the ETH staking contract far outstripped withdrawals. However, deposits slowed on April 13, while withdrawals were strong.

ETH waiting for withdrawal

Validators need to update the client in their staking software to change the withdrawal credentials from 0x00 to 0x01 and redirect to a valid Ethereum address. After validators do so, partial withdrawals, i.e. reward withdrawals over 32 ETH staked, will be processed automatically.

At the time of writing, 70.1% of validators have changed to 0x01, installing over $850 million worth of 407,851.20 for withdrawals.

Additionally, 875,325 ETH (worth $1.85 billion) is awaiting full withdrawal. In addition to the amount processed in the first 40 hours, more than 1.42 million ETH will be withdrawn from the staking contract.

ETH withdrawals will be limited to 1,800 validators per day, which means withdrawals of 57,600 ETH per day (based on 32 ETH per validator). There is 875,325 ETH waiting to be fully withdrawn, corresponding to a potential $120 million daily sell pressure.

On-chain data predicts that 1.4 million ETH will be withdrawn in the next few days

Validators are switching to ETH withdrawals | Source: Nansen

During the first three days, partial withdrawals will also be processed, totaling daily withdrawals of 136,000 ETH and 173,000 ETH.

However, 62.8% were forced out of the Kraken exchange to meet a $30 million stop-staking agreement with the US Securities and Exchange Commission (SEC).

ETH withdrawn from Kraken is likely going to decentralized liquidity staking platforms like Lido, Frax, and Rocket Pool, rather than being marketed.

On-chain data predicts that 1.4 million ETH will be withdrawn in the next few days

The amount of ETH the entity is waiting to withdraw | Source: Nansen

Interestingly, Lido accounted for 56.07% of withdrawals processed to date, which is a bit concerning as previous estimates suggested that withdrawals from derivative liquidity collateral platforms like Lido would be minimal.

The 9.6 million ETH currently staked is profitable and therefore the most prone to a sell-off. Whether many illiquid stakers will switch to withdrawing ETH remains to be seen, as they account for more than 34% of the total 17.4 million ETH.

Ethereum Price Analysis

Technically, Ethereum price is bullish after breaking the $2,000 resistance level. Buyers will be looking at support and resistance around $2,300 and a breakout of $2,900 recorded in May 2022. Short-term support on the downside is around $1,725.

On-chain data predicts that 1.4 million ETH will be withdrawn in the next few days

ETH price chart daily frame | Source: TradingView

According to Coinglass data, the funding rate of ETH perpetual contracts is in a neutral zone. Typically, the permanent status of the neutral futures market after a great bull market means that traders are not yet excited about the current rally, as evidenced by the surge in positive funding rates. It also provides more upside potential for ETH.

On-chain data predicts that 1.4 million ETH will be withdrawn in the next few days

ETH Perpetual Contract Funding Rate | Source: Coinglass

However, this could limit the market’s upside as the withdrawal of ETH could put some selling pressure on the spot market.

Mr. teacher

As reported by Cointelegraph

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