As more and more Ether (ETH) holders line up to exit staking, a crypto expert warns that this trend could put significant selling pressure on Ether.

According to data from validatorqueue.com, as of Friday, the amount of ETH in the validator exit queue on the Ethereum blockchain reached 855,158 ETH, setting a historic high, with a total value of approximately $3.7 billion.

Staking refers to holders of digital assets locking their tokens to secure the blockchain network and earn rewards. In uncertain market conditions, stakers may choose to unlock and retrieve their tokens, converting them into relatively low-risk assets or cashing out directly.

The Ethereum network limits the amount of ETH that can be unlocked within a certain timeframe, designed to maintain network stability and prevent validators from exiting en masse, which could disrupt the blockchain's consensus mechanism. Currently, it is expected to take 15 days to completely clear this exit queue.

Bitwise senior investment strategist Juan Leon told (Decrypt) that this increasing exit queue may be driving the recent pullback in ETH.

Leon explained that the unlocked Ether could have a negative impact on prices, especially when staking derivatives (like stETH) are trading at a discount. He said:

"Tokens like stETH could trade at a discount, which would reduce their value as collateral, triggering risk reduction, hedging, or even liquidation, further leading to a sell-off of spot ETH."

He added that with the increase in the exit queue, if the cost of borrowing ETH skyrockets, some trades may also be forced to unwind.

When this happens, "leverage 'stETH circular trading' through DeFi liquidity pools becomes unprofitable." Leon pointed out: "Traders unwind positions and sell ETH to repay loans, creating synchronous selling pressure."

Shortly after ETH approached the historic high of $4,878 set in November 2021 on Thursday, the actions of unlocking ETH in the market began to increase. Since then, ETH has retraced its gains, influenced by heightened geopolitical uncertainty and a higher-than-expected U.S. Producer Price Index (PPI). At the time of writing, the trading price of Ether is $4,325, down 2.6% in the last 24 hours.

Despite concerns about the validator exit queue on Ethereum, Leon reminds us that an increase in ETH waiting to be unlocked does not necessarily mean that the price of the token will continue to decline. He stated:

"Unlocking usually does not trigger a sudden crash, but in a pressure environment, it can continuously release new supply like a tap. If this supply exceeds the new demand in the market, it will create downward pressure on the ETH price."

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