Ethereum fund withdraws 49.6 million USD in the second largest liquidity event

According to on-chain data tracked by Arkham Intelligence, Ethereum Foundation withdrew 21,271 ETH, worth about 49.66 million dollars, in its largest liquidity event in 2026.

5/12/20265 min read

The action of withdrawing capital from the big man

According to on-chain data tracked by Arkham Intelligence, the Ethereum Fund withdrew 21,271 ETH, worth about 49.66 million dollars, in the biggest liquidity event of 2026. The move marks the second significant capital withdrawal in two weeks and has sparked a debate about the Fund's treasury management strategy, market impact and the fragile balance between operational funding and community trust.

The transaction, confirmed earlier today, includes the conversion of encapsulated ETH (wstETH) through Lido's withdrawal contract, starting the withdrawal process that will return the money to the liquid ETH in the Fund's treasury wallet. Combined with the withdrawal of 17,035 ETH (worth about $48.9 million) on April 26, the Fund has now withdrawn nearly $100 million ETH from contributions within two weeks - a significant reversal of the strong donation campaign that started just three months ago.

The next powerful Staking strategy is the quick Withdrawal

The time and scale of the capital withdrawal events have surprised market observers familiar with the Organization's recent staking roadmap. This organization has systematically built towards the self-set goal of 70,000 ETH to be staking, a goal that they are about to achieve before starting these withdrawals.

The organization started its strong staking strategy in February 2026 with an initial deposit of 2,016 ETH, followed by 22,517 ETH throughout March, and more than 45,000 ETH staking in early April. By the end of April, the Organization held about 69,500 ETH in staking positions, close to 70,000 ETH.

The withdrawal of 17,035 ETH on April 26, followed by a larger withdrawal of 21,271 ETH today, reduced the Staking position of the Organization to about 52,965 ETH. In less than three weeks, the Fund has moved from almost reaching the staking target to reducing the amount of staking holding by about 30%. The sudden strategic shift from strong accumulation to significant divestment has created confusion and speculation about the Fund's true intentions and financial situation.

Periodic treasury rebalancing

According to statements attached to transaction data, the deposit withdrawal is intended to "rebalance the treasury by releasing operational liquidity to cover the cost of protocol development and the ongoing ecosystem funding cycle of the Fund." This explanation is consistent with the Fund's historical model of periodically converting deposited assets into cash to finance:

Technical talent, security audit, testing infrastructure and research initiatives drive Ethereum's technical roadmap.
Funding for projects built on Ethereum, from developer tools to scaling solutions for user-oriented applications. Operating expenses:
Infrastructure costs, management costs, legal and compliance functions, and community engagement programs.

The Fund's deposit strategy, officially approved in June 2025, is clearly designed to generate profits to support these activities. The stated goal is to create a sustainable funding mechanism through deposit rewards while maintaining the flexibility to access the treasury fund when operational needs require.

From this perspective, deposit withdrawals represent routine business activities, converting ETH deposits generate profits into cash when spending needs require. The fund emphasized that the ETH price movement was generally still neutral in the hours after the information was announced, showing that the market understood that this was a normal fund management activity rather than a bearish signal.

Silently but still watching closely

Unlike previous cryptocurrency cycles, where large moves from institutional treasuries cause immediate price fluctuations, the market's reaction to the withdrawal of deposits of the Ethereum Fund is quite calm. ETH still fluctuates in the range from $2,320 to $2,400 in the hours and days after both deposit withdrawal events.

On-chain data confirms the withdrawal of converted deposits converted ETH into available ETH—but has not yet shown transactions transferred to centralized exchanges or converted into stablecoins. Until the money is transferred to places where it can be sold, the actual selling pressure is still just speculation, not confirmed.

The fund has a history of using ETH holdings to finance activities transparently. This is not the first time the Fund has withdrawn or sold ETH, and previous cases have been absorbed by the market without causing a prolonged price impact.

Deposit withdrawal events take place in the context of significant spot ETF cash flow. In the period from April 20 to 24 alone, Ethereum spot ETF products recorded capital inflows reaching 155 million USD, of which BlackRock's ETHA had the highest capital inflows with 138 million USD. The total net capital flow into ETF has reached 11.97 billion USD, creating significant buying pressure that can absorb the capital sold from the fund.

The story of "The biggest seller" and community psychology

One of the harshest criticisms that is spreading in the cryptocurrency community is that the Ethereum Foundation is the "biggest seller of ETH", a somewhat simplified statement that reflects the community's disappointment with the fund's treasury management.

The fund periodically sells a large amount of ETH to fund activities. Unlike holders who bought ETH at market price, the Fund receives its ETH holdings as part of the initial mining and initial ICO allocation, which means that the actual cost of the fund is zero. From a pure market perspective, the Fund represents the possibility of oversupply.

The Fund's mission is not to maximize the price of ETH or its own treasury value, but to promote Ethereum as a decentralized computing platform. Selling ETH to fund developers, researchers and infrastructure that makes Ethereum valuable is exactly what the Fund should do.

However, the emotional weight of being labeled "the biggest seller" affects the market psychology and decision-making of the Fund. It creates pressure to minimize public selling, which can lead to non-optimal treasury management (such as holding ETH when diversification is more reasonable) or lack of transparency about needs and funding strategies.

Evaluation and conclusion

The Ethereum Fund's withdrawal of $49.6 million ETH - the second event within two weeks, bringing the total amount of withdrawals to nearly $100 million, showing the complexity of treasury management of a protocol in the era of complete transparency on the chain. The foundation is facing a unique challenge: funding more than $100 million per year for development and funding while every treasury decision is displayed in real time, subject to the immediate interpretation of the market and filtered through the public sentiment of internal selling and signal commitment. No traditional non-profit organization operates under equivalent supervision; no corporate treasury is subject to equal transparency.

What has changed compared to previous cycles is the market's ability to absorb the fund's sale without causing a long-term impact on the price. The emergence of spot ETFs providing billions of dollars of investment capital from institutions has fundamentally changed the market structure of Ethereum. The management of the fund's treasury - previously the main source of price risk - now represents a manageable, transparent and increasingly frequent aspect of Ethereum's institutional maturity.

The next chapter in this story will not be written by the decisions about the Treasury of the Foundation, but by the way the community and the market interpret them. Will the story of "best-selling product" become a popular view, creating pressure leading to impal budget management? Or will stakeholders realize that a well-funded and transparent Fund that converts assets to fund important development projects is a strength, not a weakness?

Disclaimer: The information presented in this article is the author's personal opinion in the field of cryptocurrencies. This is not financial or investment advice at all. Every investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The opinion in the article does not represent the official position of the platform. We recommend that readers do their own research and consult experts before making any investment decisions.

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