Ethereum Fell 20%, But Stakers Refuse to Sell: Here is Why

EthereumETH-3.54% Faces Market Pressure After Inflation Data

Ethereum (ETH) experienced a sharp 20% price drop on Tuesday, falling toward the $2,000 level. This decline came right after hotter-than-expected US inflation data unsettled broader financial markets.

Although ETH managed a modest rebound to around $2,060 shortly after, the asset remains under noticeable pressure. Yet, despite the market turbulence, underlying data from Ethereum's staking ecosystem reveals an unexpected trend: long-term investors seem largely unwilling to sell.

Past performance of digital assets is no guarantee of future returns. You can track live market data anytime at bitkub.com/th/market/ETH.

Understanding the Basics of Ethereum Staking

To understand why this matters, let us quickly look at how Ethereum works. Ethereum operates on a Proof-of-Stake system. Investors lock up or stake their ETH to help secure the network and earn rewards in return.

Think of staking like putting money into a high-yield savings certificate. If you want your coins back so you can trade or sell them, you must join an exit queue to request an unstaking process. A long exit line usually means many people want to sell, while a short exit line means holders prefer keeping their coins locked away.

Staking Exit Queue Collapses by Nearly 99%

On October 11, the Ethereum staking exit queue reached roughly 457,840 ETH waiting to be withdrawn. However, by November 9, that number collapsed by nearly 99% down to just 5,061 ETH.

According to data from ValidatorQueue, the exit queue has since rebounded to around 66,000 ETH. Even with that slight increase, the exit line remains about 86% lower than its October peak.

This massive drop in the exit queue is significant. When stakers withdraw their ETH, it is often the first step toward selling on the open market. A smaller exit queue indicates that immediate selling pressure from stakers is currently low, although it does not completely rule out selling from non-staked holdings.

Supply Dynamics: Over 36% of ETH Remains Locked

Looking at the broader supply numbers, approximately 44.5 million ETH is currently locked in staking contracts. That amounts to roughly 36.4% of all circulating Ethereum supply.

PelinayPA, an analyst at CryptoQuant, points out that high staking participation can help support prices over the medium to long term. When more supply is locked, fewer coins are immediately available on exchanges to be sold.

The Other Side: Demand for New Staking Is Slowing Down

While current stakers are refusing to exit, the appetite for new staking is showing signs of cooling off. The entry queue—which measures new investors waiting to stake their coins—has shrunk considerably.

Back in February, the entry queue stood at over 4 million ETH. By early November, that figure fell to around 910,000 ETH. This decline suggests that while existing stakers are holding their ground, the backlog of new staking commitments is narrowing.

Whale Activity and Leverage Risks

Another emerging risk comes from large holders, commonly known as whales. Analytics firm Santiment recorded more than 630 daily stETH (staked ETH) transactions worth at least $100,000 in early November. This represents the highest level of sustained whale activity since April.

High borrowing activity shows stETH is being heavily used as collateral to borrow ETH and other assets.

Using stETH as collateral allows investors to take on leverage. However, high leverage introduces liquidation risks if prices drop suddenly. When ETH broke below Santiment's intraday warning level of $2,050 on Tuesday, it highlighted how vulnerable leveraged positions can be during market pullbacks.

Institutional ETF Outflows Present Headwinds

Institutional product flows have also reflected cautious sentiment. Spot Ethereum ETFs recorded net outflows of $184.6 million on November 9 alone.

When institutional investors pull capital from ETFs, it adds downward pressure on market prices, counterbalancing the supply absorption provided by locked staking balances.

Market Outlook: Key Levels and Potential Scenarios

As the market navigates these conflicting signals, analysts are keeping a close eye on key price levels and market conditions:

• Upside Scenario: If institutional demand via spot ETFs returns and market sentiment improves, a sustained recovery above the $2,200 level could strengthen the bullish case. However, price recovery remains dependent on broader economic stability.
• Downside Scenario: Conversely, if ETF outflows persist, new staking entry queues continue to weaken, and forced liquidations from collateralized loans occur, ETH could retest support at $2,000 or face further corrections.

In conclusion, while Ethereum stakers are demonstrating confidence by keeping their assets locked, external headwinds such as macroeconomic data, ETF outflows, and leverage risks continue to shape the short-term landscape.