Ethereum Staking Crisis: Record 855,158 ETH in Exit Queue Sparks Selling Pressure

On August 17th, COINOTAG reported that the validator exit queue on the Ethereum blockchain surged to an astonishing 855,158 ETH, marking an unprecedented milestone. According to Juan Leon, a Senior Investment Strategist at Bitwise, this substantial outflow of ETH poised for undelegation may be a driving factor behind the recent downturn in its market value. Generally, the increasing queue of undelegated Ethereum tends to exert significant downward pressure on prices, potentially leading to heightened selling activity across the market. Furthermore, trading protocols that involve staking tokens like stETH at a discount could adversely impact the collateral value, resulting in market participants opting for risk mitigation strategies, hedging tactics, or even forced liquidations. This scenario culminates in immediate ETH spot sales. Additionally, leveraged positions associated with “stETH loop” trades in DeFi liquidity pools will likely become unviable, prompting traders to close their positions and sell ETH, which amplifies the overarching selling pressure.