Ethereum Staking Skyrockets to $65 Billion – A New All-Time High

• Ethereum staking has soared to its ATH by the number of assets locked.
• Despite dwindling prices, the staking embrace has continued to grow.

In a positive turn of events, Ethereum (ETH) staking has reached a historic milestone, with the total supply locked in the deposit contract soaring to an All-Time High (ATH) of $65 billion. 

According to data from blockchain analytics platform CryptoQuant, this surge in staking activity has defied expectations of saturation, with approximately 29.39 million ETH coins staked on the blockchain, representing nearly a quarter of the total circulating supply. The trend has garnered attention, and it accounts for approximately 35% of the total market capitalization of all Proof-of-Stake (PoS) assets.

Increased Interest in Ethereum Staking

The surge in Ethereum staking can be attributed to several factors, with heightened interest stemming from the Shapella Upgrade introduced in April. This upgrade addressed concerns related to withdrawal ambiguity, providing a boost to the staking ecosystem. 

Another catalyst for the rise in ETH staking is the introduction of a permissionless mainnet using Distributed Validator Technology (DVT) by the SSV Network. This technology allows anyone to participate in Ethereum staking, challenging the centralization of providers such as Lido and Coinbase. SSV Network rewards participants with SSV tokens, aiming to decentralize Ethereum staking and enhance security and resilience.

Notably, the rise in ETH staking has become independent of Ethereum’s price performance. The staking trend shows an increased staked supply in January despite a drop in ETH’s price. This suggests that ETH holders are prioritizing guaranteed, stable returns over the risks associated with market trading.

While ETH staking has gained popularity, it has come at a cost in the form of reduced staking yields. Staking Rewards data indicates a decline in the annualized average reward rate from 5% at the beginning of January to 3.54% at the time of writing. This is a natural consequence as rewards are inversely related to the amount of ETH deposited and the number of stakers involved.

Ethereum as a Long-Term Investment Asset

Despite the decline in staking yields, ETH holders appear to be leaning towards long-term investment strategies. The liquid supply of ETH meant for active trading has dwindled over the last two years, as noted by CryptoQuant. 

This shift indicates that Ethereum is increasingly perceived as a long-term investment asset rather than a speculative trading instrument. At the time of writing, Ethereum is trading at $2,308, showing a 2.29% increase in the past 24 hours, with a market capitalization of $277.4 billion and a 24-hour trading volume of $9.3 billion. 

However, amid the optimism, legendary crypto analyst Benjamin Cowen has issued a cautionary note to the Ethereum community. Based on historical cycles, Cowen predicts that ETH could experience a notable downturn toward the $1,000 region.

While some investors may consider divesting their ETH holdings in the face of Cowen’s predictions, others see an opportunity to accumulate more ETH during a potential downturn and ride the subsequent bullish phase.