ETH/USD falls below $2000 as Ethereum withdrawals intensify
ETH/USD has lost about 1.74% of its value in 24 hours to trade at $1,906.99. Kraken wallets have removed a substantial amount of staked ETH. The decision has been bearish for the ETH/USD pair, which has fallen from an eleven-month high.
- ETH/USD drops when over $1 billion worth of Ethereum is withdrawn from Kraken.
- The reduced price of ETH invites aggressive accumulation, resulting in a rise in exchange outflows.
- The number of addresses holding 100 or more ETH has dropped to a four-month low.
Ethereum exchange outflows increase significantly
Recently, Ethereum has shifted from the Proof of Work algorithm to the Proof of Stake method with the Shanghai update. It is a significant step since it allowed investors to withdraw their staked ETH. However, there were concerns that a surge of ETH withdrawals from staked wallets would impact the price of ETH/USD.
Moreover, after the recent upgrade, a significant cryptocurrency exchange called Kraken is taking the step in this development as the second round of complete withdrawals from staking gets started.
Over 330K ETH have been fully withdrawn through Kraken, leaving about 175K ETH for withdrawals and other uses. The exchange itself isn’t directly driving down prices on the market. However, the withdrawals of staked Ethereum from it are playing a role in pushing prices down.
Meanwhile, the cryptocurrency sector experienced notable volatility recently, with some analysts referring to the Ethereum staking unlock as one of the primary causes of this market decline. The selling pressure on the market rises as more staked ETH is unlocked and withdrawn. Hence, it weighed on ETH/USD prices and turned the whole crypto sentiment negative.
Kraken ETH staking withdrawals
On April 20, CoinShares claimed that the Kraken exchange had caused more than 80% of the withdrawals. According to CoinShares, Kraken witnessed massive withdrawals as the SEC ordered them to suspend their staking service for US users.
Recently, the US Securities and Exchange Commission forced Kraken to discontinue its staking services for Americans. The exchange was fined for failing to complete the necessary registration before offering and selling their services for staking digital assets. In response, Kraken disgorged $30 million to resolve SEC complaints.
Meanwhile, as ETH exchange outflows accelerated, the number of addresses holding 100 or more ETH fell to a 4-month low. Glassnode Alerts, a blockchain intelligence platform, tweeted on April 21 that the number of wallets holding 100+ ETH coins has recently fallen to a 4-month low. The tweet states that 47,280 addresses presently have 100 or more ETH.