Ethereum owners are increasingly lined up to release tokens. This could put a lot of selling pressure on cryptocurrencies, according to one crypto expert.
According to ValidatorQueue.com, Ethereum Blockchain’s Validator Exit Queue hit 855,158 ETH on Friday. The token was worth a total of $3.7 billion in the second half of Friday, according to data provider Coingecko.
Staking is the process in which digital asset owners lock up tokens to secure blockchain networks and earn rewards. Stakers can choose to unlock and reclaim the crypto in uncertain market conditions and either transfer to or cash out relatively risk-off assets.
Ethereum Networks limits the amount of ETH that is not integrated at a given time. This limitation is designed to maintain network stability by preventing the exit of large amounts of validators, and can disrupt blockchain consensus mechanisms. Currently, the queue is expected to take 15 days to clear.
The upcoming measured column of ETH may be driving a recent retracement of assets, said Juan Leon, senior investment strategist at Bitwise. Decryption. The second-largest cryptocurrency by market capitalization has recently dumped hundreds of dollars after approaching setting a new all-time high mark.
Non-stage Ethereum Queue could have a negative impact on ETH prices, he explained.
“Tokens like Steth can be traded at a discount, which reduces their value as collateral, leading to reduced risk, hedging and even liquidation that leads to ETH sales,” Leon said.
He added that some deals could be rewind as the number of unstaged lines increases, especially if the costs of borrowing ETH spikes arise.
When that happened, it “leveraged the ‘steth loop’ transaction through a liquidity pool under the Defi protocol,” Leon said. “Traders leave their positions, sell ETH to pay off their loans, creating synchronized sales pressure.”
With each Coingecko data, efforts to volatile ETH have been growing shortly after Thursday’s token reached a record distance of $4,878 in November 2021. Since then, Altcoin has traced its profits, with an increase in geopolitical uncertainty and a higher-thickness producer-price index report down from the US.
Despite concerns about Ethereum’s Validator Exit Keue, Leon warned that waiting for the ETH rise to be demolished does not necessarily signal that token prices will continue.
“Staking usually doesn’t cause a sudden crash, but under stress, it can act like a steady tap of a new supply,” he said.
