Ethereum's (ETH) recent price performance has been like a roller coaster, soaring from $3,698 in early August to a four-year high of $4,788 last week, before falling back to $4,260, a drop of about 10%. Meanwhile, on-chain data reveals a concerning trend: a surge in ETH being unstaked by validators, with an exit queue backlog exceeding 1.075 million ETH, valued at about $3.7 billion. Will this wave of redemptions trigger a selling bomb, or is it just a temporary market adjustment? We can refer to the latest data for analysis.
Redemption wave is surging: record 40 days to exit the queue
According to on-chain data platform Rated, on August 9, Ethereum's exit queue was abnormally congested, with processing times extending from the usual 2-3 days to 25 days. As of August 18, the ETH waiting to be unstaked reached 1.075 million, with processing times further extended to 40 days, while staking new ETH takes less than 5 days. The funds exiting the queue doubled to $3.7 billion within four days, reflecting the trend of validators eager to transfer ETH back to wallets.
The Ethereum unstaking process consists of two steps: validators first enter the exit queue and stop their network validation role; then they enter the withdrawal queue to transfer ETH back to their wallets. Starting from August 6, redemption requests surged, and it is expected that some tokens will enter the market before August 25. If these ETH are sold off in large quantities, it could put significant pressure on prices.
Selling risk vs market resilience: two opposing views clash
Bears believe that a large quantity of unstaked ETH may trigger selling pressure. The supply shock of 1.075 million ETH could push prices down further if buying demand is insufficient, especially against the backdrop of ETH falling 10% from its high of $4,788. User @notgrubles even criticized Ethereum's exit mechanism as 'artificially limiting the free market', arguing that the 40-day exit time may support prices in the short term but cannot mask potential selling pressure.
However, bulls hold a different view. Some believe that although the net outflow of 600,000 ETH is significant, the market has previously digested similar redemption waves multiple times. For instance, after the backlog on July 26, ETH rose 20% within two weeks. Coupled with strong inflows from institutional funds, the market may have the capacity to absorb the new supply. Data shows that after ETH's price broke through $4,100 on August 9, it displayed strong buying-side liquidity, alleviating some sell-off concerns.
BlackRock doubles down on ETH: Institutional confidence is key
Although the redemption wave has raised concerns, continued accumulation by institutional investors provides fundamental support for ETH. The latest data indicates that BlackRock increased its holdings by 1.33 million ETH in the past 30 days, with a year-on-year increase of 64.9%, while Bitcoin only saw an increase of 30,000 coins, a year-on-year growth of 4.2%. The accumulation speed of ETH is 15 times that of BTC. As of August 14, BlackRock's ETH holdings reached 3.2 million coins (approximately $14.78 billion), while BTC holdings were 744,240 coins (approximately $88.43 billion), showing a clear preference for ETH.
In addition, BlackRock's Ethereum ETF (ETHA) performed strongly. On July 23, ETHA absorbed 115,295 ETH (approximately $427 million) in a single day, bringing total holdings to 2.74 million ETH, with assets under management exceeding $10 billion. The entire U.S. ETH ETF market has seen inflows of over $10 billion since mid-May, indicating institutional confidence in ETH's long-term potential. Industry insiders reveal that Wall Street institutions are optimistic about ETH due to the SEC and White House's 'Project Crypto' policy, expecting its role in on-chain finance and asset tokenization to drive future growth.
Ethereum's long-term potential: Supported by technology and ecology
The appeal of Ethereum comes not only from institutional funds but also from its technological advantages. Layer 2 solutions (such as Arbitrum and Optimism) enhance transaction efficiency, and staking yields (annualized 3%-5%) attract long-term investors, while the ongoing inflow of ETH ETFs further solidifies market confidence. On-chain data shows that Ethereum's inflation rate has dropped to 0.12%, with only 3,569 new ETH added weekly, far below the redemption volume, indicating potential tightening of supply.
Despite short-term redemption pressures, ETH has recently formed a market structure of 'accumulation-expansion-correction-breakout', and there remains the possibility of continued upward movement after breaking through $4,100. Coupled with institutional accumulation and ecological development, Ethereum may challenge $4,800 or even higher in the coming months.
Views:
This wave of redemptions is both a risk and an opportunity.
In the short term, the unlocking of ETH supply at the end of August may trigger volatility, but institutional funds and ecological advantages provide confidence for long-term holders. Investors are advised to pay attention to on-chain data (such as changes in exit queue) and ETF inflow trends, while managing positions reasonably to cope with volatility.
As long as it does not fall below 4,000 points, it remains in an upward trend.