The Ethereum Merge was one of the most anticipated upgrades in blockchain history — marking the network’s shift from proof-of-work to proof-of-stake. With it came waves of speculation, fear, and misinformation, especially around a critical question: Will millions of locked ETH flood the market after the Merge and crash the price?
You may have heard claims like:
“The day of the Ethereum Merge is the day over 12 million unlocked ETH will be dumped, crashing the price into oblivion.”
While this sounds alarming, it’s based on a misunderstanding — or worse, deliberate FUD (fear, uncertainty, and doubt). The reality is far more nuanced and actually bullish for long-term holders.
After extensive research, on-chain analysis, and technical review, here are three essential truths about ETH unlocks post-Merge that every investor should understand before making emotional decisions.
🔐 Truth #1: Staked ETH Does Not Unlock at the Time of the Merge
Let’s clear this up immediately: the Merge did not trigger ETH withdrawals.
Many assume that once Ethereum transitioned to proof-of-stake, all staked ETH would instantly become liquid. That’s false. The ability to withdraw staked ETH and accrued rewards was not activated during the Merge. Instead, it was delayed and later introduced through a separate upgrade called "The Shanghai Upgrade", which happened in April 2024 — more than 18 months after the Merge.
👉 Discover how staking rewards are reshaping Ethereum’s supply dynamics
This means that for over a year after the Merge, no new ETH could enter circulation from staking, regardless of how much was locked. In fact, with EIP-1559 continuously burning transaction fees, Ethereum entered periods of net deflation — where more ETH was destroyed than issued.
Consider this:
- Annual issuance post-Merge: ~0.5% inflation
- Burn rate via EIP-1559: often exceeds issuance during high network activity
- Result: Negative net supply growth — a powerful structural tailwind for price
So rather than a supply shock, we saw a supply squeeze — the exact opposite of what FUD predicted.
🕰️ Truth #2: ETH Withdrawals Are Gradual, Not Instant
Even after the Shanghai Upgrade enabled withdrawals, there was no floodgate release of staked ETH. Why?
Because Ethereum enforces a validator exit queue to prevent network instability.
Here’s how it works:
- Only a limited number of validators can exit per epoch (~6.4 minutes).
- Currently, around 6 validators per epoch are allowed to begin exiting.
- With over 395,000 active validators at the time of withdrawal activation, full exit processing could take over 400 days under worst-case scenarios.
- In practice, with dynamic adjustments and staggered exits, it’s more likely to take several months — but still gradual.
This throttling mechanism ensures:
- No sudden sell pressure from mass unstaking
- Network security remains intact
- Validators cannot collude to exit en masse and attack the system
Additionally, withdrawals come in two forms:
- Partial withdrawals: Ongoing rewards above 32 ETH are claimable daily — minimal market impact.
- Full withdrawals: The entire stake (32 ETH + rewards) can only be processed after exiting the queue.
This phased release model makes a coordinated dump nearly impossible — both technically and economically.
💎 Truth #3: Most Staked ETH Comes From Long-Term “Diamond Hand” Holders
Who actually stakes their ETH for years without guaranteed exit options?
Not traders. Not short-term speculators.
It’s true believers — the so-called “ETH maximalists” — who lock up their assets in support of network security and decentralization.
Let’s break down the data:
According to analytics platforms like Nansen and Etherscan:
- Over 57% of staked ETH is held through liquid staking protocols like Lido
- These tokens can be traded or used in DeFi via derivatives like stETH — meaning holders don’t need to unstake to access liquidity
- Only about 30% of staked ETH comes from solo validators — individuals running their own nodes
Running a solo validator requires:
- Technical know-how
- Minimum 32 ETH (~$100K+ at current prices)
- Commitment to uptime and network integrity
These aren’t casual investors. They’re committed participants who likely believe in Ethereum’s long-term vision. Most have no intention of selling — especially not at current market prices.
Moreover, exchanges like Binance and Coinbase offer custodial staking with near-instant liquidity options. If someone wants flexibility, they use those services. Those who chose native staking likely did so for ideological or strategic reasons — not quick profits.
👉 See how smart money is positioning in Ethereum’s staking ecosystem today
📊 So, What’s the Real Impact on ETH Supply and Price?
Let’s connect the dots:
| Factor | Effect |
|---|---|
| Delayed withdrawals (Shanghai Upgrade) | No immediate post-Merge unlock |
| Exit queue limits | Gradual, months-long unstaking process |
| Liquid staking dominance | Most stakers already have liquidity |
| Solo stakers = diamond hands | Low sell intent among core supporters |
| EIP-1559 burns | Ongoing deflationary pressure |
The result? A resilient supply model that resists dumping — and may even tighten under sustained usage.
In fact, several on-chain models now classify Ethereum as "ultrasound money" — an evolution of Bitcoin’s “sound money” concept — due to its deflationary traits under certain conditions.
❓ Frequently Asked Questions (FAQ)
Q: When did ETH withdrawals start after the Merge?
A: Withdrawals were enabled in April 2024 via the Shanghai-Capella upgrade, roughly 18 months after the Merge.
Q: Can all staked ETH be withdrawn at once?
A: No. Ethereum limits the number of validators exiting per epoch to maintain stability. Full unstaking could take many months.
Q: Does staking reduce circulating supply?
A: Indirectly, yes. While staked ETH isn’t removed from supply, it’s illiquid. Combined with EIP-1559 burns, this creates net deflation during high usage.
Q: Will large-scale unstaking crash ETH’s price?
A: Unlikely. The exit queue slows releases, and most stakers are long-term holders. Historical data post-Shanghai shows minimal price impact.
Q: What percentage of ETH is currently staked?
A: As of 2025, approximately 25–28% of total ETH supply is staked — a record level indicating strong confidence.
Q: How does liquid staking affect sell pressure?
A: It reduces it. Users get liquidity via tokens like stETH without needing to unstake, avoiding direct market sales.
🏁 Final Thoughts: Deflationary Pressure vs. Macro Headwinds
We’re now in a fascinating phase for Ethereum:
On one side, macroeconomic forces like Federal Reserve interest rate hikes and quantitative tightening create downward pressure on risk assets — including crypto.
On the other, Ethereum’s own mechanics are generating organic deflation:
- Lower issuance post-Merge
- Persistent fee burning
- Slow, controlled release of staked supply
So the real question isn’t "Will unlocked ETH crash the market?"
It’s "Can Ethereum’s internal strength outweigh external macro pressures?"
For informed investors, the answer increasingly leans toward yes.
👉 Explore real-time staking metrics and on-chain insights to track Ethereum’s next move
Ethereum isn’t just surviving the transition — it’s evolving into a more sustainable, secure, and economically sound network. And those who understand the nuances of staking and supply dynamics are best positioned to benefit.
Stay informed. Stay patient. And remember: not all unlocks are created equal.