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

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

As the amount of Ethereum staked 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), the 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 up in staking.”

The expansion of staking acts as a factor that fundamentally changes the market structure. While network security is strengthened, the amount of tradable assets 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 firms are estimated to have secured 6.6 million ETH to 7.4 million ETH, accounting for approximately 5.5% to 6.1% of the total supply. Combining staked amounts and institutional holdings, about 38% of the total supply is effectively out of market circulation.

In such a structure, even if prices fall, it is difficult for selling pressure to emerge quickly. Staked assets have limited immediate liquidity, and institutional holdings also tend to be long-term. As the inelasticity of supply strengthens, the market's fundamental strength is becoming more robust.

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

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