Once more, Ethereum is commanding the spotlight as fresh figures indicate that the amount of ETH locked in staking contracts has hit a new peak.
Over 35 million ETH are now in these contracts, which makes up over 28.3% of the total circulating supply. This remarkable achievement not only speaks to the steadily building confidence that folks seem to have in the long-term profitability of Ethereum but also hints at a dangerously low supply of ETH in the crypto market.
Although some recent price volatility has affected ETH, big investors (often called whales) have been using the pullback to accumulate massive amounts of ETH. Indeed, short-term market sentiment seems mixed, but there’s no way to deny that (1) staking activity is growing, (2) whale activity is, if anything, intensifying, and (3) institutional engagement is on the rise. Putting those pieces together, it’s hard not to see a favorable shift in Ethereum’s market trajectory.
Record ETH Staking Reduces Liquid Supply
Since the network transitioned to proof-of-stake, Ethereum staking has been increasing steadily. But the recent uptick staking to 35 million ETH staked marks an all-time high. This is now over 28 percent of Ethereum’s total supply, and so that really reflects a strong commitment from the holders of Ethereum staking to the long-term development and security of this network. And then, you know, we have ETH staked and effect; that means much less ETH is available to trade on exchanges.
Liquid ETH supply is tightening right now. This is happening for two main reasons: first, that demand for liquidity in the Ethereum economy tends to be higher in the second half of any given year; and second, that large-scale liquidations of staked ETH aren’t happening as quickly or as frequently, which means that plenty of ETH is still being locked up in staking contracts. Ethereum’s supply is becoming sufficiently inelastic that any meaningful increase in demand could provoke a price shock.
The wider context includes an increasing interest from conventional finance. A growing number of companies listed on the Nasdaq have started to integrate cryptocurrencies such as ETH and BTC into their treasury management. This trend is being taken as an indicator of the increasing recognition of crypto assets by the mainstream as long-term stores of value and component parts of a viable corporate treasury management strategy.
Whales Double Down Despite Market Dip
The case for the long-term value of Ethereum is being further strengthened by whale activity. One major investor, identified by wallet address 0xd8d0, has re-entered the market after previously racking up over $30 million in profits on ETH. This investor, whose recent purchase came after a dip in ETH’s price, bought 30,000 ETH, worth roughly $73 million at the time of the transaction.
The same wallet has not spent nearly $295 million USDC since June 11 to accumulate a total of 115,465 ETH. The average price of the 115,465 ETH was $2,555, but the wallet now holds a position down by about $15 million.
Another major whale, operating from wallet address 0x7055, borrowed $10 million USDC from the decentralized lending protocol Aave just four hours ago to buy 4,170 ETH at a price of $2,400. On June 12, this same whale spent 86.79 million USDC to acquire 31,458 ETH at a price of $2,759.
These transactions indicate a strategy of leveraging short-term volatility to build a large ETH position at what these whales presumably view as discounted prices. This kind of accumulation from major players during low retail enthusiasm has historically been a strong signal of coming bullish momentum.
Tightening Supply Meets Strategic Buying
High staking levels, aggressive whale buying, and increasing corporate adoption all seem to be painting a very bullish picture for Ethereum. Recent price stagnation notwithstanding, over one-quarter of the total ETH supply now finds itself locked in staking, while available for immediate sale, the amount of ETH seems to be shrinking fast—thanks in no small part to the tens of thousands of coins that have, in recent weeks, been scooped up by large investors.
Accumulation by whales, particularly when juxtaposed with a dwindling supply of liquid assets, is generally a precursor to upward price moves. Much of this is because these large players tend to act ahead of the broad market—in other words, they front-run the retail trader—placing buy orders in the dark so that only they benefit when the price goes up.
At the same time, Ethereum can still give staking rewards, which emphasizes its usefulness as something that can and should yield rewards. This probably has the effect of encouraging even more long-term holders because those holders are now in a position where they might be able to obtain two different types of rewards from their holding.
Ethereum’s fundamentals, across the board, are solidifying—ranging from the participation of the network’s validators to the activity of its users to the investing behavior of its various constituencies. And yet, for all that, the price of ETH has been going down. It seems not so much an uprise of any one or another particular kind of Ethereum fundamental as a plight of Ethereum on the price charts. But does it directly translate into the common Solidity situation of Ethereum right now? Evidently yes.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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