This study examines the potential effects of investors being able to withdraw their Ethereum (ETH) stakes next month.
The market intelligence branch of the cryptocurrency exchange Binance, Binance Research, estimates that there are more than 16.5 million staked Ethereum worth more than $25 billion, or around 14% of the entire supply.
When the Shanghai upgrade is implemented the following month, people who have staked ETH will be able to withdraw their holdings. The update is often referred to as Ethereum Enhancement Proposal 4895 (EIP-4895.)
To determine if the upgrade will cause a sell-off, Binance Research first examines where the majority of ETH is staked.
With over 5 billion ETH staked, or 29.2% of the total ETH staked, the biggest ETH-staker is the liquidity provider Lido. 26% of ETH is staked on big crypto exchanges such as Coinbase and Binance, followed by 25% of ETH staked by individuals.
Binance Research then examines the status of the stakes. According to Binance Research, the bulk of ETH holders have had access to liquidity on their holdings for months, indicating that this group is unlikely to see a rapid sell-off.
“The point is that 57% of ETH stakes have had access to liquidity for many months with both their capital and incentives. This set of users has no real motive to sell following the Shanghai Upgrade, therefore we should not be too concerned about them.
Binance Research wonders if 42.3% of “illiquid” speculators, such as single speculators, have any motivation to sell at this time.
“Several of these groupings may be referred to as ‘ETH-maxis’… “Are they in a hurry to sell ETH for $1,600?”
The number of ETH holders who are underwater is a further indicator that a large sell-off is unlikely. According to the data, just 31% of ETH investors are profiting.
The bulk of ETH holders are underwater and have no motivation to sell at the present ETH price (at least on a mathematical basis).
If there is a greater sell-off than the data suggests, Binance Research claims there are withdrawal limitations to decrease ETH price volatility. Ethereum is currently valued at $1,702 at the time of writing.
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