Ethereum staking hit a fresh record. Total staked ETH climbed to 41.4 million coins, or 34% of all ETH in circulation. More pressing: 1.4 million ETH moved into staking in just seven days, meaning fewer coins are available for trading.
When investors lock ETH in staking, they pull it from the market. Less liquid supply usually means tighter spreads and bigger price swings on smaller trades. Ethereum's 18% rally this quarter may owe something to that squeeze.
Whales follow the same playbook
Major holders are staking aggressively. BitMine, Tom Lee's operation, added 150,120 ETH worth $278 million last week. It now holds 5.07 million ETH staked, roughly 87% of its total position. One whale went further: it withdrew 19,000 ETH and staked it immediately. Over three weeks that same wallet moved 112,000 ETH worth more than $208 million into staking.
The pattern repeats across addresses. Everyone's doing the same thing, which compounds the liquidity drain.
But there's a darker backdrop. Stablecoin market cap dropped 1.6% this quarter, the worst performance on record. More than $6 billion in liquidity has exited crypto entirely. Market makers are feeling the pinch. Daily spot trading volume fell to $15 billion last week, the lowest of the year. Morgan Stanley downgraded Circle to Underweight, slashing its price target from $106 to $38, citing slower USDC growth and eroding reserve income.
If ETH continues flowing into staking at this pace, the crypto market could face a genuine liquidity crunch. Fewer coins to trade, fewer stablecoin backstops, and thinner order books. That's the real risk.
This article is informational only and should not be construed as financial advice or investment recommendation.