Over $4.6 billion worth of Ether (ETH) is now on the exit queue for staking on Ethereum. Data from ValidatorQueue shows that validators are seeking to unstake a total of 1,009,8000 ETH from the network.
According to the data, the massive amount of ETH awaiting withdrawal has increased the wait time for the ETH exits, taking it to 17 days and 13 hours. The new record high for ETH unstaking continues a trend of withdrawals from validators over the past few months.
Interestingly, liquid staking protocols account for most of the unstaked ETH. Dune Analytics data shows that the top three unstakers in the past month are Lido with 251,104 ETH, Ether.fi with 155,104 ETH, and P2P.org with 148,288 ETH.
Change in ETH Stakers over the past month (Source: Dune Analytics)
However, it has not been all withdrawals as several validators are also waiting to stake more ETH. According to ValidatorQueue, 580.593 ETH is in the entry queue for staking, with the wait time now being over 10 days. Figment has led ETH stakers for the past month with 230,122 ETH, followed by Blockdaemon, Kiln, and Coinbase.
Meanwhile, the Ethereum staking ecosystem remains vibrant, with Dune Analytics data showing that 1.12 million validators are on the network. Staked ETH is also over 36 million ETH, representing over 29% of the token supply. 24% of the staked ETH is through Lido.
What is driving ETH unstaking?
With Ether staking showing a net outflow over the past few months, analysts have started speculating on what is the reason behind the mass unstaking. Many points to the performance of Ether itself.
The altcoin has been one of the best performers this year. Since it started its resurgence in April, ETH has seen consistent growth with its value doubling in more than three months and setting a new all-time high price of $4,953.73 on August 24.
Although it has already seen a price correction and trades around $4,500, it remains at a very strong price point for most holders. This is enough to warrant the massive profit-taking among the traders, even as positive sentiments about ETH performance remain.
However, analysts have also identified other reasons for the unstaking with DeFi researcher Ignas noting that leveraged ETH unwinding is a key factor. He noted that crypto investors have been staking ETH on Lido for stETH and using it to borrow more ETH on Aave, which they also stake for higher yields.
While this has been going on for a while, Ignas said that higher borrowing rates have been forcing many to exit, with DeFi yield farmers choosing to unstake and stay safe while rates stabilize. He added that stETH/ETH is slowly depegging, making traders unstake ETH to take advantage of the potential yield if stETH depeg further.
Ethereum’s outperformance of Bitcoin may last longer
Meanwhile, ETH performance over the past few months has enabled it to outperform BTC in the medium term. According to CoinMarketCap, ETH has risen by 68.37% in the past three months, while BTC has only risen by 2.36% within the same period.
Even with the profit taking, demand for ETH remains very high with the spot ETH exchange-traded funds pulling in record inflows over the past few weeks. ETH treasury companies are accumulating on a large scale, absorbing all the selling pressure from ETH unstaking.
Analysts now expect that ETH could outperform BTC in the long term. CryptoQuant analyst CryptoMe noted that ETH’s recent price movements have been accompanied by increased open interest in the asset on the Chicago Mercantile Exchange (CME), a sign that its recent performance is backed by fresh liquidity.
Interestingly, the analyst noted that retail traders have yet to enter the market for ETH, citing the number of trades on centralized exchanges. Thus, they believe ETH could see further highs and continue to separate from BTC in performance.
The arrival of retail investors usually signifies that the market top is near, as this group usually comes in mostly due to FOMO and provides exit liquidity for the institutional and whale investors.
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