Ethereum (ETH) Staking Surpasses $121B, Potential Supply Crunch on the Horizon?

• The total value of staked Ethereum exceeded $121 billion, which is approximately 27% of the supply.
• A supply shock is expected to propel the ETH price higher if the ETF dynamics play in favor.
• According to Nansen, an on-chain data tracking avenue, 32.5 million ETH is currently staked.

Discover the latest developments in Ethereum staking and its potential impact on ETH prices, driven by ETF approvals and market dynamics.

Total Ethereum Reserve Staked Surpasses $121 Billion

Ethereum (ETH) registered a phenomenal surge lately owing to the enhanced approval odds of ETH ETFs. Moreover, signs of a supply crunch were noted owing to the massive Ethereum reserve being locked up for staking. A supply shock could potentially drive the ETH price toward the $4,000 target.

According to Nansen, an on-chain data tracking avenue, 32.5 million ETH is currently staked. Moreover, this reserve constitutes approximately 27% of Ethereum’s total supply. At prevailing market prices, this staked ETH is valued at a staggering $121 billion.

Impact of Ethereum ETF Approval

Nansen further elaborated on the situation in a post on X (formerly Twitter), highlighting the dual outcomes dependent on market demand. “If an ETH ETF gets approved and there is demand, either in anticipation or after approval then this would be positive,” Nansen stated.

They suggested that the approval of a Spot Ethereum ETF could significantly boost demand for the crypto, further constraining supply and potentially driving up prices. The above-mentioned trend was noted when the ETH price soared past $3,700 amid the ETF hype. On the contrary, Nansen noted that if there is a lack of demand for ETH, the current staking levels might not have a substantial impact.

ETH Price Trend

The Ethereum price has seen a slight decline and struggled to sustain above $3,700. At press time, the ETH price declined 2.19% to $3,705.54 on Wednesday, May 22. Whilst, the second largest crypto displayed a market capitalization of $446.16 billion.

Furthermore, the 24-hour trade volume for ETH slumped 42.02% to $27.51 billion. However, the ETH price outlook by analysts and major industry participants has been bullish. Standard Chartered analyst Geoff Kendrick reiterated the bank’s target of $8,000 for ETH by the end of this year.

Moreover, they also believe that the approval of Ethereum ETFs is imminent. In addition, the SEC has approached the ETF applicants, urging them to file amended 19b-4 filings. Additionally, the agency is expected to leverage the dynamics of ETH and staked ETH to ‘bypass’ the question of Ethereum’s status. Hence, Fidelity and Grayscale removed the staking feature of overnight.

Conclusion

In summary, the substantial amount of Ethereum being staked, coupled with the potential approval of Ethereum ETFs, could lead to a significant supply shock, driving ETH prices higher. While the market dynamics remain complex, the bullish outlook from analysts and the ongoing regulatory developments suggest a promising future for Ethereum investors.