Kraken, a U.S.-based crypto exchange, has submitted the largest Ether withdrawal request since the recent Ethereum blockchain upgrade, according to data from blockchain data tracker Nansen. Kraken had to shut down its unregistered staking programs and was fined $30 million by the Securities and Exchange Commission (SEC) in February.
Kraken has registered to withdraw 556,272 Ether, worth approximately $1.17 billion, which accounted for 63.3% of all staked Ether in the withdrawal queue as of Friday.
The recent upgrade to the Ethereum blockchain, known as the Shanghai upgrade, allows users called validators to withdraw their staked Ether. Staked Ether refers to tokens that were deposited to support the operations of the Ethereum blockchain in return for a passive income. Up to 115,200 withdrawals can be processed daily, as per the Ethereum Foundation.
Coinbase and Huobi also initiated Kraken-like withdrawal requests
Other major crypto exchanges have also initiated withdrawal requests. Coinbase, the largest crypto exchange in the U.S., has requested withdrawals of 94,749 Ether, accounting for 10.8% of the total in the queue. Huobi, another crypto exchange, has requested withdrawals of 45,072 Ether, approximately 5.1% of the total in the queue.
Zhuling Chen, CEO of RockX, a crypto-staking service provider, stated that it was expected that certain centralized exchanges like Kraken would initiate withdrawals. He also mentioned that there is a steady inflow of staked Ether in tandem with the withdrawals.
There were concerns that the large withdrawal requests could lead to a rush of Ether sales, as approximately 18 million Ether, equivalent to about 15% of the total supply, were staked into the network, according to Etherscan. However, on-chain data provider CryptoQuant stated in a report that it did not expect a flood of Ether sales. CryptoQuant argued that there would be low selling pressure as most of the staked Ether was still holding losses compared to Ether prices when it was staked. Ether reached all-time highs of over $4,600 in November 2021.
CryptoQuant also noted that the currently locked Ether cannot be withdrawn simultaneously and estimated that it may take up to a year to withdraw the total value staked in the network. Despite the withdrawal requests, Ether’s price has been rising, with a 10.54% increase in the past 24 hours, breaching the $2,000 ceiling for the first time since August last year, according to CoinMarketCap data.
The token has risen by 77% so far this year. Chen highlighted that the Shanghai upgrade is a significant milestone in Ethereum’s history as it eliminates the biggest counterparty risk. Previously, users had to send their Ether into a “black hole” and hope to get it back with rewards at an indefinite time, but now this promise has been delivered, Chen said.
