The line to exit as a validator for ethereum is now empty, a steep collapse from its all-time high of more than 46 days in September. 

Simultaneously, the entrance queue for staking has been growing, with the waiting period jumping from under eight days in December to over 25 days on Wednesday, with 1,460,911 ethereum tokens currently waiting to be staked. 

(Staking, the key security mechanism for the ethereum network, refers to the process of locking up tokens to aid in the blockchain’s consensus mechanism in exchange for rewards.)

Why the imbalance? Julio Moreno, head of research at crypto analytics firm CryptoQuant, said to Sherwood News, “Higher staking or staking inflows are seen as holders having expectations of higher prices ahead.” 

Sean Dawson, head of research at crypto options platform Derive.xyz, said the disparity for traders is “a decent mid-term signal as rising entry queues represents increased confidence in ETH yields and conviction by said holders. Further, falling exit queues means deleveraging by exiting parties is likely completed so generally bullish.” 

The exit queue spiking to record levels last year occurred in large part because staking platform Kiln, which operates 5% of the ethereum network, initiated a precautionary exit of all its validators. 

Anthony Bertolino, vice president of ecosystem at distributed validator project Obol, told Sherwood, “This ‘forced rotation’ created a historic backlog as billions of dollars in institutional stake had to exit and shuffle to new setups, temporarily clogging the exit ramp.”

The staking market is undergoing change, with traditional finance and treasury firms contributing a new layer of demand. According to Kam Benbrik, head of research at staking provider Chorus One, these institutions, including asset managers and hedge funds, are seeking direct exposure and access to ethereum’s base yield through staking. 

BitMine Immersion Technologies, the largest ethereum treasury firm, started staking a portion of its stockpile in December.

ETF providers are also accelerating this trend by integrating staking into their products, such as digital asset manager Grayscale, which recently announced it distributed staking rewards to shareholders. 

“As long as the entry queue remains congested and exits stay low, it signals that these institutions are building positions for the medium to long term. This provides an optimistic outlook for ETH because it reflects capital locked away from the circulating supply,” Benbrik said.