Ethereum's Circulating Supply 'Missing'...Supply Shock Hits

▲ Ethereum (ETH), Quantum Computer/AI Generated Image

As Ethereum's staked amount reaches an all-time high, a structural change is emerging where the circulating supply released into the market is rapidly decreasing.

According to the cryptocurrency specialized media Bitcoinist on April 22 (local time), Ethereum (ETH) staking ratio has surpassed 32%, reaching an all-time high. Leon Waidmann, Head of Research at Lisk, stated via X (formerly Twitter) that “one out of every three Ethereum currently in circulation is locked in staking.”

The expansion of staking acts as a fundamental factor in changing the market structure. While network security is strengthened, the tradable supply decreases, limiting selling pressure. The staking ratio, which was at 0% in January 2021, has expanded to one-third of the total supply in five years, showing rapid growth.

The inflow of institutional funds is also accelerating the supply shortage. Digital asset treasury companies have reportedly secured 6.6 million ETH to 7.4 million ETH, equivalent to approximately 5.5% to 6.1% of the total supply. When combining staked amounts and institutional holdings, approximately 38% of the total supply is effectively out of market circulation.

In this structure, it is difficult for selling pressure to rapidly emerge even during price drops. Staked amounts have limited immediate liquidity, and institutional holdings also tend to be long-term. As the inelasticity of supply strengthens, the market's fundamental strength becomes more robust.

Currently, a tug-of-war continues between buying and selling forces even amidst the supply shortage structure. Some whale investors have been observed expanding short positions on exchanges to respond to short-term movements. The market equilibrium continues to be reshaped amidst the supply pressure triggered by increased staking.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*