- Ethereum token dropped below $1.9K in the previous 48 hours, ahead of Shanghai hard fork.
- Will the upgrade trigger a selloff?
- More details on the upgrade.
YEREVAN (CoinChapter.com) – Ethereum token Ether (ETH) value dropped 5% in the previous 48 hours and fell just below $1,870 in the Asian-Pacific session on April 12.
As the Shanghai hard fork date arrives, fears of further selloff built, as the upgrade will unlock the roughly 15% of ETH in circulation that is currently staked, approximately 18 million ETH, worth over $33 billion at the current price.
Will the hard fork cause an ETH selloff?
ETH Selling Pressure Analysis, conducted by the crypto analytical platform CryptoQuant, concluded that the pressure to withdraw the staked ETH would be low after the Shanghai upgrade. CryptoQuant derived the results from a profit & loss analysis of the ETH staked.
The research noted that selloff pressure emerges when market participants sit on extreme profits, which is not the case now.
We argue this mostly because: a) the majority of the ETH staked (52% or 9.4 million) is currently in loss (comparing the current ETH price to the price at the moment each ETH was staked) and b) the average depositor of the largest staking pools is also at a loss currently.
read the analysis.
According to April 4 statistics, over 9,4 million staked ETH were lost against 8,5 million tokens in profit.
Meanwhile, the outflow of ETH from exchanges has slowed, which could indicate retail investors’ bearish expectations from the upgrade, at least in the short term. According to another analytical platform Glassnode, the weekly metric stood at a month-low of nearly $13.8 million.
Typically, high exchange outflow indicates investors’ willingness to hold their tokens expecting profit rather than trading them on the exchanges.
Shanghai hard fork — more details
The Ethereum Merge took place on Sep 15, 2022, taking the Network from proof-of-work (PoW) to proof-of-stake (PoS). As a result, Ethereum eliminated mining and introduced staking, the process of locking a certain amount of coins on the Network in exchange for rewards. Moreover, to become a Validator, a holder had to lock a minimum of 32 ETH.
Investors have been locking their 32 ETH in staking accounts since 2020. However, they could not withdraw their funds. That’s where the Ethereum Shanghai Upgrade comes in. The upgrade will introduce the Ethereum improvement proposal EIP 4895 and add withdrawal functionality.
Additionally, validators who wish to withdraw their staked ETH might have to face a considerable waiting time since there is a single queue for both full and partial withdrawals. For example, the Shanghai hard fork would allow withdrawal slots lasting 12 seconds; only 16 partial withdrawals can occur.
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