Ethereum investors rush to pile onto $72bn staking bet despite price slump

Ethereum has passed a new milestone with over 30% of circulating token supply now staked, ValidatorQueue data shows.

That means nearly one-third of all Ethereum is now illiquid, earning just under 3% yield — modest by crypto industry standards.

Yet the staked Ether represents a $72 billion bet on the blockchain network’s long-term future. And investors are queueing up another $8 billion worth of tokens in the validator line, a record high.

Bitmine rushed to stake another $282 million worth of tokens on Wednesday, bringing its locked stash to $6 billion, or 69% of its total Ethereum holdings.

Price rout

The votes of confidence for Ethereum’s proof-of-stake mechanism come despite a freefall in the token’s price. The plunge coincides with a broader crypto industry downturn that has wiped out $2 trillion, or 46%, of the total market’s value since October.

Trading at around $2,000 at time of reporting, Ethereum is now down 60% from its August peak and well below levels seen in the 2021 bull run.

That’s despite favourable macroeconomic conditions that have pushed up other asset classes like stocks and gold to historic highs.

Adding to the pain, prominent backers of the second-largest blockchain network have been dumping tokens en masse in February. Seven-digital sellers include Ethereum co-founder Vitalik Buterin and Stani Kulechov, founder of decentralised finance platform Aave.

Buterin said that the Ethereum Foundation is “entering a period of mild austerity” over the next five years, and that his sales of the token are to fund fresh initiatives.

Still, many are doubling down on Ethereum shopping.

Bitmine Chair Tom Lee predicts “V-shaped recovery” where prices will quickly rocket back to their peaks after a significant drop.

“Crypto prices are highly volatile, and in fact, this is the eighth time since 2018 that Ethereum prices have fallen 50% or more from a recent high, meaning declines like this are seen annually,” he said.

Lee has long been one of the most prominent Ethereum bulls, predicting a token price of $250,000.

Goldman Sachs is also a big Ethereum holder. On Tuesday, the investment bank disclosed over $1 billion in exposure through direct equity in exchange-traded funds in its fourth-quarter Securities and Exchange Commission filing.

Crypto market movers

• Bitcoin is up 0.6% over the past 24 hours, trading at $67,350.
• Ethereum is up 1.4% past 24 hours at $1,977.

What we’re reading

• Ripple lawyer warns industry needs to move on Clarity Act ‘while the window is open’ — DL News
• Goldman Sachs holds $1bn in Bitcoin ETFs despite price rout — DL News
• Robinhood Pushes Deeper Into Tokenization With Layer 2 Testnet Launch — Unchained
• The real winner of last week’s crash — Milk Road
• Galaxy CEO: Crypto investors should expect ‘much lower returns’ — DL News

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at lance@dlnews.com.