Ethereum is undergoing a "major overhaul": is it a good time to enter a position, or a signal to escape?

Author: SoSo Value

The market has become elusive again.

On one hand, the price of ETH has neither surged nor plummeted significantly, leaving investors restless; on the other hand, worrying news headlines keep appearing - "$2.3 billion worth of ETH is queued for redemption, the largest selling pressure in history!" Panic spreads rapidly. It's like being in a theater where the lights start to flicker, and the audience in the front rows begins to leave one after another. You start to doubt: "Is this performance about to collapse? Should I exit too?"

But don't rush. Before impulsively hitting the "Sell" button, let's calmly and carefully investigate the most fundamental question: who is selling? More importantly, who is buying? Once you see both sides' cards clearly, you will realize that this is not a panic-driven rush to buy—rather, it is a reshuffling of a game that could determine the future.

Step 1: Seller - Who is selling ETH?

Recently, the large-scale selling pressure of ETH comes from three aspects:

Early investors cashing out profits: As ETH hits new highs, many long-term holders have decided to cash out their gains and reduce their positions.

On-chain staker mass redemption event: Since the Shapella upgrade allowed for more flexible ETH withdrawals, a large number of previously locked tokens have entered circulation, some of which have been sold.

Institutions and whales are reallocating at high points: some institutions and large accounts have sold off at recent highs, shifting into other assets or engaging in speculative arbitrage.

The biggest sales event and main address

In July 2025, a significant sell-off event occurred at the well-known institution Trend Research: within 24 hours, they sold 69,946 ETH (approximately $218 million), including a block sale of 21,000 ETH (approximately $67 million). Even after the sell-off, the Trend Research wallet still holds 115,187 ETH, indicating that this was a portfolio rebalancing or a phase of profit-taking, rather than a "full-scale sell-off."

Another major seller is a whale account (which sold 40,000 ETH, worth approximately $127 million, and has sent it to Kraken exchange). In July, the total sales from institutions and whale accounts exceeded $374 million.

The Ethereum Foundation is also suspected of selling, but it clarified that part of the sale was actually conducted by the nonprofit organization Argot Collective, which supports Ethereum infrastructure, and they sold 1,210 ETH for development funding.

Selling Features and Process

Most of the sell-off comes from institutions and whales, which is a typical profit-taking "one-time settlement," rather than blind panic selling.

Most of the sold ETH flowed to CEXs (such as Kraken and Binance), and a portion was quickly absorbed by new capital and ETF demand.

The reality is that whales and institutional investors buy and sell at both highs and lows, with one side taking profits and the other building long positions. Key insight: This round of redemption is a normal phenomenon in the mid-stage of a bull market, essentially reflecting the optimization and consolidation of the investor structure.

Step 2: Who is buying? Wall Street's new "pipeline" flows in

With the exit of "old money", who will become the new big buyers? The answer is: Wall Street - specifically, Ethereum spot ETFs.

If the cryptocurrency market is a pond, then the Ethereum spot ETF is like a newly constructed giant pipeline that connects it directly to the ocean of global capital (traditional finance). Since its launch, the U.S. spot Ethereum ETF has attracted a net inflow of $8.32 billion and currently holds over 4.4% of the circulating supply of ETH. BlackRock's iShares Ethereum ETF (ETHA) alone holds over 2.2% of the total supply of ETH.

Statistical data shows that the fund flow of the ETH ETF has a high degree of independence: even during market turbulence when the Bitcoin ETF experiences capital outflows, the ETH ETF steadily attracts capital inflows like a magnet.

This divergence sends a strong signal: the investment flowing into ETH is not passive or trend-driven, but rather a well-considered strategic allocation.

Just as stock investors selectively buy the second-largest blue-chip stock (Ethereum) when the leading index (Bitcoin) fluctuates, institutions are recognizing the unique value of ETH as "digital oil" and a decentralized platform.

Another major buying force behind the rise of ETH comes from savvy listed companies and institutional "whales." These investors no longer view ETH as a speculative trading tool but rather as a productive asset that can generate returns and has been incorporated into their balance sheets. Corporate financial officers are now asking, "How much stable income can ETH bring me?" instead of "How high can the price go?" — this marks a clear shift towards value investing.

When companies begin to convert a portion of their balance sheets into ETH, it marks the industry's ultimate recognition of ETH's value. This is more meaningful than short-term speculation.

Key Insight: Wall Street's "smart money" is establishing structural long positions through ETFs and fund companies. This influx of funds is stable, independent, and robust, providing strong value support for ETH.

Step Three: Validator Exit Interpretation - The Change of "Major Shareholders"

The next clue lies in the core of the Ethereum network: validator dynamics. Recently, a record number of validators have joined the exit queue, raising concerns about a mass exodus of core participants. But is this really a sign of "everyone running away"?

Let's change our perspective. Imagine the hottest restaurant in town is always packed, with people waiting outside. When the early diners finish their meals and leave, freeing up tables, does that mean the restaurant is going to close down? Of course not; it just means that others finally have the chance to come in! The current changes in validators are like the "table turnover rate" of this popular restaurant.

As of July 23, approximately 519,000 ETH (about 1.92 billion USD) are queued to exit the network (this is the largest queue since January 2024), with withdrawals facing delays of over 9 days.

Andy Cronk (co-founder of staking provider Figment): "When prices rise, people will unstake and sell to lock in profits. We have seen both retail and institutional investors repeat this practice over multiple cycles." He further noted that large institutions changing custodians or wallet technology could also trigger unstaking.

Nevertheless, market pressure is not significant - the demand for new validators is also strong, with 357,000 ETH (approximately 1.3 billion USD) waiting to join, and the validator join queue has reached its longest waiting time since April 2024 (6 days).

Some new demands may come from the ETH treasury fund; the U.S. Securities and Exchange Commission clarified that staking is not illegal, further stimulating institutional interest.

Since late May, the number of active validators has increased by 54,000, reaching a record of nearly 1.1 million.

"Exit" (validators in the withdrawal queue): mainly early investors or venture capitalists locking in profits after years of investment - planned "return on investment" rather than panic selling.

"Enter" (activating validators in the queue): 357,000 ETH are queued to join - new, committed long-term capital wants to "take the baton" and holds an optimistic view of Ethereum's future.

Key Insight: This is not a one-way "run" but a healthy handover of shareholders. Short-term speculators are transferring their chips to long-term value investors, thereby optimizing network participation and laying a stronger foundation for the next phase of growth for Ethereum.

In-depth Discussion: The Three Engines of ETH Value

Engine One: The Value Magic of the Deflationary Mechanism

Since the EIP-1559 upgrade, a portion of the base fee for each transaction is automatically burned. With the surge in network activity, the amount of ETH burned has exceeded the issuance, leading to deflation of ETH and a continuous decrease in supply. Unlike fiat currencies (where issuance can easily spiral out of control) and Bitcoin (which has a fixed limit), the deflation of ETH creates a stronger value anchor. The community jokingly refers to it as "ultrasound money": the scarcity of ETH is increasing, and the purchasing power and value storage capacity of each ETH are also enhancing.

Engine Two: On-Chain Staking - The "Long-Term Bonds" of the Economy

Each staked ETH is like a long-term government bond - locked in to secure the network and paying generous "interest" (staking rewards). Currently, the staked ETH exceeds 34 million (about 29% of the total supply), which means nearly one-third of ETH forms the backbone of the Ethereum economy.

Since the Shapella upgrade enabled the flexible withdrawal feature, the net staking amount has increased by over 12 million ETH, demonstrating strong long-term confidence.

Staked ETH can not only earn rewards but also reduce the circulating supply and set a price floor for ETH.

Engine Three: Regulatory Tailwinds Attracting Stablecoin Flow and On-chain Growth

The introduction of the U.S. "Stablecoin Regulatory Act" (GENIUS Act) has prompted numerous financial and tech giants to announce new stablecoin plans, triggering a "stablecoin race." The total market capitalization of stablecoins has recently reached $244 billion, with the Ethereum ecosystem accounting for 54%.

When stablecoins flood into Ethereum, it is like giant "new ships" bringing real-world cash into the blockchain economy. This will drive the development of the on-chain DeFi market, increase the consumption of Gas fees, and create a sustained demand for ETH (for transaction fees and staking).

Risk Assessment: It's not all smooth sailing.

Despite the bright prospects, we must realistically assess the risks and challenges:

*ETH is classified as a commodity; there is still controversy regarding certain staking/derivative products, but the regulatory environment is becoming clearer.

Conclusion: Addressing Uncertainty

Beneath the surface "ice layer" (price fluctuations, exits), Ethereum's "flame"—structural purchases and capital reallocation from ETFs—is burning fiercely. This "significant reorganization" is not a sign of decline, but a revival of a healthier and stronger ecosystem.

The conclusion is clear: for investors who can pierce through the fog and identify structural trends, today’s market fluctuations are not a situation of "fleeing for their lives," but rather a strategic buying opportunity. For a long-term bull market in the secondary market, only through meaningful trading volume and consolidation can price and value truly align.

The real question for investors is: How much time, confidence, and patience are you ready to invest in this investment journey?