Ahead of Shapella’s upgrades last month, many crypto experts speculated that the activation of staked Ether withdrawals could drag the price of the native asset down.
But the latest data suggests that ETH post-withdrawal selling pressure is “relatively a non-event.” This is backed by the fact that deposits almost match the amount of ETH entering circulation.
State of Ethereum: Post Shapella
The implementation of Shapella is important because it enables the withdrawal of staked ETH from the Beacon Chain for the first time. However, the event also raised concerns about uncapped ETH entering circulation which could lead to continued selling pressure. The strong view, on the other hand, argues that the risk of not being able to withdraw is eliminated, resulting in more deposits.
According to a recent Nansen report that analyzed the situation of Ethereum post-Shapella, it was observed that the elimination of the risks that are not profitable for the time being has recovered the selling pressure from the withdrawals. On top of that, a significant portion of the ETH withdrawn is probably not intended for sale.
The report states that the upgrade will have net zero impact on ETH staked.
“There are 19.3M ETH, including rewards, on the Beacon Chain today, equal to the amount of ETH on the Beacon Chain at the time of the Shapella upgrade, meaning it has net zero impact on the network so far.”
Withdrawal requests are dominated by centralized crypto exchanges. Kraken, for one, leads the way with withdrawal volume accounting for more than 26% of all ETH withdrawals since the upgrade. This is likely related to the recent regulatory crackdown on the US-based exchange’s staking service, which forced it to return staked ETH to depositors on its platform.
“Other notable Principal ETH withdrawers include Binance, Coinbase, and Private Transactions Miner:0xffd, with 13.3%, 12.5%, and 5.44% of Principal ETH shares withdrawn, respectively.” – the report is readable.
A month after the upgrade, withdrawals have slowed significantly, and Nansen’s data suggests that most entities are currently holding their remaining balances for now. Entities such as Lido, Binance, Coinbase, Kiln, and Stakefish accounted for deposits of more than one million Ether last month.
Conduct of Withdrawers
Nansen reports that around 73% of the withdrawn ETH from the Beacon Chain so far has been sent to centralized exchanges. However, the majority of these are CEXs withdrawing ETH themselves, indicating that most of the token sent to these entities is not intended for sale. Instead, these tokens are for internal exchange operations.
In contrast, the amount of ETH sent to decentralized exchanges from withdrawers represents only 1.23% of the total proportion. Approximately 20% of withdrawn ETH was found to be sent to all sorts of addresses not labeled as CEX, DEX, Staking, or DeFi, according to Nansen, and approximately 6% of all withdrawn ETH is sent to re-stake.
Nansen believes that this cohort is less profitable because they still run validator nodes, and staking rewards are processed automatically. Therefore, some ETH from partial withdrawers will return to the Beacon Chain to earn more yield.
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