Ethereum: What’s behind the sudden surge in withdrawals?
- Ethereum’s withdrawals constituted the full validator amount, rather than partial withdrawals.
- ETH staked supply hit a fresh all-time high.
The launch of the Shapella upgrade earlier in the year turned out to be a watershed event as far as Ethereum [ETH] staking was concerned. With ambiguity around withdrawals removed, staking became a reliable activity.
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Unsurprisingly, users started to lock their ETH holdings in the Beacon chain smart contract with much more vigor. As a result, deposits have constantly surpassed withdrawals since Shapella has been operational.
Are there signs of a shift in sentiment?
However, the last week witnessed a dramatic deviation from the usual trend. According to on-chain analytics firm IntoTheBlock, the week saw the highest daily withdrawals since July, with over 58,000 ETH getting unstaked on 28 August.
It was interesting to note that the withdrawn amount constituted the original stake, or principal as it is now popularly known, as per a separate dashboard by research firm Nansen. Users unlock their full balance only when they are exiting the staking process entirely.
On the other hand, partial withdrawals, or the rewards accrued from staking, are automatically sent to withdrawal accounts, and they can continue to participate in staking.
Timing of the withdrawals trigger speculations
Another striking feature of the development was that these withdrawals came just a day before the Grayscale victory-induced market rally. The action of unstaking is typically driven by the need to liquidate them on exchanges. While there was no hard evidence, smart money investors might have unlocked and sold their holdings for quick profits.
That being said, Monday was an outlier, and the trend quickly reverted to old habits. The total staked amount continued to scale new heights, according to a recent update by Glassnode. Staked supply reached 28.5 million, 46% more than what it was at the time of Shapella.
— glassnode alerts (@glassnodealerts) September 2, 2023
Read Ethereum’s [ETH] Price Prediction 2023-24
ETH couldn’t hold on to its gains from 28 August for long. The optimism generated after Grayscale’s victory was dampened after the U.S. Securities and Exchange Commission delayed its decision on spot Bitcoin [BTC] ETFs yet again.
ETH was valued at $1630 at the time of writing, down 1.13% since last week, per CoinMarketCap.