ETH sees a surge in trade exits, as discounted price attracts aggressive accumulation. At least 19,500 validators are in the retirement queue, after the Shapella update. MEV and bot activity on the Ethereum network went uphill.
It’s been over a week since Ethereum’s highly anticipated Shapella update. While there was a lot of anticipation, many ETH holders were concerned about potential selling pressure from validators unlocking their ETH. The concerns were genuine given the large sum of ETH that had been locked up.
According to a recent analysis by Coinshare, validators who withdraw their ETH have a 12-day waiting period for the Shapella update to withdraw all their staked coins. It also revealed that there were 19,500 validators in the withdrawal queue and 7,800 validators in the deposit queue. There were concerns about the possible increase in withdrawals, especially since more than 95% of validators have not yet withdrawn.
Does Validator Move Mean Validator Migration?
The CoinShares data also revealed that most validators were withdrawing their staked ETH from Kraken to switch to a different staking platform. The data suggested that approximately 80% of the ETH that was withdrawn was from Kraken, due to recent SEC regulatory pressure that the exchange has been receiving from the SEC.
The key determinant for analyzing the selling pressure based on validators withdrawing their staked ETH was whether they would stake their ETH on other platforms. There was a strong possibility that other platforms like Lido could absorb most of the validators.
ETH Demand Status
An assessment of the level of demand for ETH could help determine the extent of the selling pressure. The latest ETH trade flow data on Glassnode revealed a sharp increase in trade outflows over the past 2-3 days.
Currency outflows were almost twice the amount of currency inflows. This could indicate that there was a strong accumulation courtesy of the latest ETH price discount. As far as whale activity is concerned, whales controlled approximately 32% of the current supply of ETH at this time.
Such signs confirmed that the market was regaining confidence, albeit not strong enough to push ETH back above $2,000 for now. Part of the current uncertainty may have to do with the as-yet-unknown fate of the validators who are still in the unstacked incomplete cashouts.
Bots and Sandwiches
A lot of bot activity was observed on the Ethereum network. According to EigenPhi data, over the past month, MEV bots on Ethereum set a new record by making $1.035 million in profit through 11,640 transactions. This included $940,000 in profits from sandwich attacks.
It is worth noting that a sandwich attack is a type of frontal attack used by MEV (miner extractable value) bots in which they place two trades around a target trade to exploit the price difference for profit. The large number of MEV bots and sandwich attacks can cause the Ethereum network to slow down due to increased congestion and transaction fees. This can have a negative impact on overall network efficiency and user experience.
By Audy Castaneda
