Thursday, 13 June 2024

Crypto News

Ethereum on-chain data forecasts the withdrawal of 1.4M ETH over the next few days

Ethereum on-chain data forecasts the withdrawal of 1.4M ETH over the next few days

Ethereum’s long-anticipated Shanghai and Capella upgrade was activated on April 12 and the total withdrawals in the first 40 hours after the Shapella upgrade stood at 142,425 ETH, per Nansen data. This falls in line with previous estimates

For a brief moment on April 12, when Shapella was activated, the deposits to ETH staking contracts outpaced withdrawals. However, deposits have slowed down come April 13 while the withdrawals are going strong.

ETH moved for withdrawals

The validators are required to update their staking software clients with withdrawal credentials changed to 0x01 from 0x00 and point to a valid Ethereum address. Once validators do that, the partial withdrawals, i.e. the withdrawals of rewards above 32 ETH, will be processed automatically.

Over 70.1% of validators have changed to 0x01, with 407,851.20 worth over $850 million set for withdrawal.

Additionally, 875,325 ETH worth $1.85 billion are waiting for full exit. Adding to the amount already processed in the first 40 hours, over 1.42 million ETH will be withdrawn from the staking contract.

ETH withdrawals will be rate limited to 1,800 validators per day, translating to a daily withdrawal of 57,600 ETH per day based on 32 ETH per validator. With 875,325 ETH waiting for full exit, it corresponds to potential daily selling pressure of between $120 million.

Validator statistics moving to withdraw their ETH. Source: Nansen

In the first three days, when partial withdrawals will be processed as well, the total daily withdrawals will be 136,000 and 173,000 Ether per day.

However, the above statistics must be taken with a grain of salt because 62.8% are forced withdrawals from the U.S.-based crypto exchange Kraken in response to a $30 million settlement with the U.S. Securities Exchange Commission to discontinue staking services.

There is a chance that a significant portion of Kraken withdrawals can move to decentralized liquid staking platforms (LSD) like Lido, Frax and Rocket Pool instead of being sold in the market.

Breakdown of ETH waiting for withdrawals by entities. Source: Nansen

Interestingly, Lido accounted for 56.07% of the withdrawals processed so far, which is slightly concerning as previous estimates suggested that the withdrawals from liquid staking derivative (LSD) platforms like Lido will be minimal.

Currently, 9.6 million staked ETH is in profits, which will remain most vulnerable to a sell-off. It also remains to be seen if more illiquid stakers move to withdraw their ETH, with…

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