Ethereum's Price Reaction to Coinbase's cbETH Withdrawals

On Tuesday, Coinbase experienced its second-largest daily withdrawal of cbETH, the liquidity staking token for Ethereum. The exchange is widely recognized as a leading platform for Ethereum liquidity staking. Consequently, the price of Ethereum dropped by approximately 2%, reaching $1,836.82 at the time of this writing.

The recent crackdown on Coinbase by the US Securities and Exchange Commission (SEC) triggered a wave of mass withdrawals of Coinbase wrapped staked Ether (cbETH) starting from Tuesday. This event acted as a bearish catalyst for the asset's price.

Coinbase observed a significant increase in the redemption of its liquidity staking token, cbETH. As one of the largest cryptocurrency exchanges, Coinbase witnessed the redemption of 35,810 cbETH over the past two days. On June 6 alone, 27,280 cbETH tokens were redeemed, marking the second-highest single-day redemption amount recorded to date, according to data from crypto intelligence tracker Dune Analytics.

Despite the SEC's lawsuit, Coinbase has announced that it will continue to offer staking services. However, the withdrawal of cbETH is likely to exert bearish pressure on the price of Ethereum due to Coinbase's prominent role as a major entity in ETH liquidity staking.

Following the release of the news regarding Coinbase, Ethereum experienced a pullback to the 61.8% Fibonacci level on the H1 timeframe. However, from that point, the value of the altcoin increased, reaching around $1850, indicating a potentially bullish setup.

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