The number of staked Ether (ETH) in May reached a new all-time high of 2.96 million ETH, or approximately 2.46% of the total ETH supply. This surge comes within a month of the much-anticipated Shapella upgrade on April 12, allowing validators to withdraw their staked ETH after two years. Many believed the heavy unstaking of ETH could prove to be a bearish event for the Ethereum network; however, less than 1% of all staked ETH was estimated to be sold after Shapella.
The record surge in Ethereum staking in May was attributed to a number of factors, including the ongoing United States debt ceiling saga, declining confidence in the U.S. dollar, the downfall of banks, and the high annual percentage rate (APR) offered on ETH staking. According to research analyst Brian McColl, the US debt ceiling saga and the earlier events with banks going bankrupt surely affected Ether’s popularity, leading to more users preferring to stake their money in ETH rather than keeping it in the bank.
The debt ceiling or debt limit in the U.S. is a statutory cap on the total amount of national debt that the U.S. Treasury may incur, limiting the amount of money that the federal government may borrow to pay off its existing debt. As Cointelegraph reported earlier, President Joe Biden and House majority leader Representative Kevin McCarthy reportedly reached an agreement to raise the $31.4 trillion debt ceiling. However, financial pundits, including BlackRock CEO Laurence Fink, have warned that the drama surrounding the debt ceiling could erode global trust in the U.S. dollar.
McColl also noted that the current APR for staking Ether is approximately 5.4%, a favorable alternative to most banks around the world. This supports the notion that Ethereum staking was a prominent choice for investors in May.
While Ethereum staking reached record highs, it’s essential to consider various factors contributing to this surge, such as economic uncertainty and the attractiveness of ETH’s APR. As Ethereum continues to evolve and adapt, investors and crypto enthusiasts should remain knowledgeable and keep an eye on market trends and factors affecting the cryptocurrency landscape.
Source: Cointelegraph
