Ethereum (ETH) Exit Queue Surges: What's Happening?
Ethereum Exit Queue Surges Amidst Price Dip
Ether (ETH) experienced a notable dip, dropping over 7% from its recent high. This decline coincided with a significant surge in the validator exit queue, reaching an 18-month peak on Wednesday.
Ethereum, operating on a proof-of-stake (PoS) mechanism, requires validators to stake and lock up ETH to secure the network. When validators wish to exit the staking system, they must navigate a validator exit queue. According to Everstake, the number of validators in this queue has recently "absolutely surged."
Currently, 644,330 ETH, valued at approximately $2.34 billion, is queued for withdrawal, with an estimated wait time of 11 days, according to ValidatorQueue. A similar spike occurred in January 2024, corresponding with a 15% price decrease in ETH.
While unstaking might indicate validators preparing to sell their assets, Everstake suggests a different perspective, noting that it's not necessarily a sign of fear or collapse, but rather a "shift." They propose that validators may be exiting to "restake, optimize, or rotate operators, not leaving Ethereum entirely."
Additionally, investors may be locking in profits, which could lead to short-term sell pressure and potential price corrections.
Profit Taking or Strategic Repositioning?
Despite the outflow, there is also approximately 390,000 ETH, worth around $1.2 billion, in the entry queue. This indicates a net unstaked amount of around 255,000 ETH.
Notably, the entry queue has significantly increased since early June, coinciding with Ether treasury companies, like SharpLink and Bitmine, aggressively accumulating the asset. Many corporate strategy firms have indicated plans to stake ETH for additional yields.
The number of active validators remains high, standing just below 1.1 million, and the amount staked is around 35.7 million ETH, representing nearly 30% of the total supply, valued at approximately $130 billion.
Ether Price Dips From Recent High
ETH has retreated about 7% from its seven-month high of $3,844, reached on Monday, and dipped below $3,550 as traders secure profits.
At the time of writing, ETH prices had slightly recovered to $3,643, remaining up more than 50% over the past month.
US spot Ether ETFs have also experienced strong demand, with over $2.5 billion in inflows in the past six trading days, even without a staking ETF approval.
Henrik Andersson, chief investment officer at Apollo Capital, noted, "We have seen $8 billion in net inflows through DeFi bridges into Ethereum mainnet over the last three months and a sizeable increase in Ethereum ETF inflows, despite BTC ETF seeing outflows. This demonstrates interest from onchain natives and institutions."
Lido's stETH Briefly Depegs
Justin Sun, founder of Tron, recently removed around $600 million worth of ETH from Aave, a DeFi lending platform, causing a brief depeg of stETH (Lido’s liquid staking token) and a sharp drop in liquidity on Aave.
This may have contributed to the exit queue as yield farmers panicked and attempted to convert stETH back to ETH or sell it on secondary markets, according to Marcin Kazmierczak, co-founder at RedStone staking platform.
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