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- Over 50% of the total Ethereum supply is now locked in staking contracts, significantly reducing market liquidity.
- BitMine has reached 72% of its goal to own 5% of all ETH, recently adding another 20,000 tokens worth nearly $40 million.
- Despite recent price volatility, Ethereum spot ETFs saw $48.6 million in net inflows, signaling sustained professional interest.
The Ethereum ecosystem reached a historic crossroads this week as two divergent forces—institutional accumulation and a shrinking liquid supply—hit critical milestones. While the broader crypto market faces a period of cooling prices, the internal mechanics of the world’s second-largest blockchain are tightening. For the first time in its 11-year history, more than half of all issued Ether (ETH) is now locked in staking contracts, effectively removing a massive portion of the asset from active circulation.
BitMine’s $40 Million Bet on a Scarcity Future
While retail sentiment remains cautious, institutional heavyweight BitMine continues to execute a high-conviction “accumulation” strategy. Led by Fundstrat’s Tom Lee, the Nasdaq-listed firm recently finalized a $39.8 million purchase of 20,000 ETH from BitGo. This move isn’t an isolated trade; it is part of a relentless march toward the company’s “Alchemy of 5%” goal—a target to own 5% of the total Ethereum supply.
As of late February 2026, BitMine has secured roughly 72% of its intended holdings. Despite a monthly price slump of nearly 40% that has pushed ETH down to the $1,970 range, the firm is leveraging the volatility to build its treasury. This aggressive buying suggests that major players view the current price drop not as a collapse, but as a strategic entry point before the supply squeeze takes full effect.
A Network Under Lock and Key
The supply dynamics are shifting beneath the feet of traders. Data from Santiment confirms that the Ethereum proof-of-stake contract now holds 50.18% of the total historical issuance. This “one-way vault” mechanism is fundamental to the network’s security, but its economic side effect is clear: restricted liquidity.
Staked ETH cannot be easily traded or spent. When validators eventually withdraw, the network issues new ETH rather than pulling it from the existing staked vault, further isolating the locked coins from market volatility. Analysts suggest that this reduction in liquid supply could act as a coiled spring; if demand returns via spot ETFs or increased on-chain activity, the lack of available tokens on exchanges could trigger a rapid price recovery.
Also Read: 8 Billion Reasons Why Tom Lee’s Bitmine Isn’t Selling Ethereum
Balancing the Scales: ETFs and Liquidations
The road to recovery is rarely a straight line. Market analysts point to a “liquidity cluster” where both long and short positions are aggressively leveraged. This creates a high-stakes environment where a sudden move in either direction could trigger a wave of liquidations.
However, the “smart money” appears to be looking past the immediate noise. Spot Ethereum ETFs recorded nearly $49 million in net inflows this week, with every major fund avoiding net outflows. This steady trickle of institutional capital, combined with BitMine’s massive treasury growth and the 50% staking milestone, paints a picture of a network that is becoming increasingly illiquid and institutionalized, even as the market waits for a definitive price catalyst.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
