The countdown is only a few hours until the Ethereum Shanghai upgrade. While it is uncertain what the price of ETH will be due to these events. Many traders are cautious because of the large unlocks and potential selling pressure. What can we expect?
What is the Ethereum Shanghai Upgrade?
The Ethereum Shanghai upgrade is a hard-forking upgrade to Ethereum that will complete the network’s transition from proof-of-work (PoW) to proof-of-stake (PoS). A stepping stone in the scalability of the Ethereum blockchain and one of the many future milestones in their roadmap.
Shanghai Upgrade Impact on price of Ethereum – ETH
When we look at where the selling pressure on Ethereum could come from, we distinguish various sources. Firstly, roughly 1.1 million ETH in staking rewards will be available for withdrawals, which is a significant amount. Secondly, Kraken will immediately unstake all ETH as U.S. investors are subject to changing regulations mentioned in the Wells Notice from the SEC earlier this year. The amount of staked ETH on Kraken is estimated to be approximately 1.25 million.
Furthermore, some speculate that the bankrupt Celsius has a staking balance of 158,176 ETH that would be withdrawn and returned to creditors’ funds. Think also at all the platforms that collapsed in 2022, such as Voyager and FTX, among others. If these platforms need liquidity to pay off their lawyers or return funds to their rightful owners, they may sell their staked ETH holdings.
All of these factors may contribute to potential selling pressure, causing the price to fluctuate or even drop. However, when we look ahead, we see that the direction of ETH’s price is bullish. As more stakers join, more coins will be locked, and ETH will become more deflationary. Over a long time horizon, this could lead to significant price increase.
What to expect for Liquid Staking Derivatives – LSD prices?
The impact of the Ethereum Shanghai upgrade won’t just affect Ethereum, but also the Liquid Staking Derivatives (LSDs) that had their whole narrative around the rewards earned on staked ETH. As the withdrawals for staked ETH become open, the LSDs may see some volatility.
For instance, some have observed large hedge funds such as Blockchain Capital selling their LSD tokens for significant profits. The company sold 1.5 million $LDO tokens, earning a profit of $1.05 million, and also sold 65,352 $RPL tokens, earning approximately $1.09 million. With big players dumping the tokens that earned interest on the staked Ethereum, it remains to be seen what implications this could have for prices after the Shanghai Fork.
The post Ethereum Shanghai Upgrade and Potential Price Scenarios appeared first on YourCryptoLibrary.
Wil je op de hoogte blijven van het laatste nieuws? Abonneer je dan op onze push-berichten op Telegram of Twitter.
Heb je vragen of wil je in contact komen met andere crypto fanaten join dan onze Telegram chat!