- Previously, many predicted selling pressure after the opening of the withdrawal
- But the ETH rate, on the contrary, rose
The recent Shapella update allowed validators to withdraw their coins from the Ethereum 2.0 contract. Many feared that the selling pressure would increase and the ETH price would fall. Despite this, the second largest cryptocurrency has risen in price. Why? To this question answered Nansen representatives.
First, Nansen initially wrote in previous reports that a large outflow of funds from staking contracts would be a temporary phenomenon. They predicted that it would last several weeks. As a result, the period turned out to be even shorter. Mass withdrawals faded away within a few days.
The second reason, oddly enough, is the American regulators.
“We knew that companies dependent on the influence of US regulators, such as Kraken and Coinbase, would face some problems. And they won’t be able to offer a withdrawal on the scale they planned”explains Jason Xu, Senior Product Manager at Nansen.
He mentions Kraken as an example. The exchange accounted for 67% of all major ETH withdrawals from the staking contract. But the SEC fined the company $30 million and they were forced to close their staking service before the upgrade.
The third reason is that market participants have long had access to liquid derivatives such as Lido. That is, they could simply output the ether, albeit “wrapped”.
Well, another important point is investor confidence. Staking participants see the potential of ETH, so they are in no hurry to withdraw their assets.