Coinbase researchers speak out about Ethereum stacking
Coinbase officials said that pressure from Ethereum (ETH) sellers should be fairly limited after the successful Shanghai upgrade, scheduled for March 2023. However, they noted: Cryptocurrency exchange Kraken's decision to close its stacking services as part of a settlement with the U.S. Securities and Exchange Commission (SEC) has added uncertainty to the dynamics of ether (ETH) supply ahead of the update
Coinbase assured that Kraken's stacking pool on Ethereum was about 7% of the total number of ethers frozen. However, not all of those digital assets will come from U.S. retail customers. "Shutting down the stacking service could result in between 350k and 1.145 million additional ETH potentially circulating in the market when Shanghai happens," wrote David Duong, head of institutional research at Coinbase.
Noted: it remains to be seen whether the realization of additional ether will be a catalyst for pressure from sellers. Noted that in December 2022, many investors were concerned that the update "poses an important downside event risk to ETH quotes." However, their opinion has changed as sentiment in the cryptocurrency market has improved.
According to assurances from experts, the recent behavior of U.S. financial regulators has tweaked the outlook a bit. Analysts said pressure from sellers could be limited as there are mitigating factors and "self-correcting mechanisms." This is likely to help control ether flows on the open market.
According to experts, the performance of the ETH market will depend on what "risk arises during withdrawals." If the macro environment deteriorates this March and stock markets are weak, investors may decide to abandon steaking and sell their ethers. If things are stable, however, many will not go in to withdraw and sell digital assets.
