Warnings about the potential dangers of Ethereum's (ETH) unstaking activation might be highly exaggerated. The net amount of selling might cause mediocre price movements only, on-chain information tells.
Ethereum (ETH) Shanghai: 170,000 Ethers (ETH) might be sold; is this a lot?
The "best estimate" scenario of post-Shanghai selling suggests that 170,000 ETH ($323 million) might be released on the market. This liquidity inflow cannot result in notable price moves, analysis by Glassnode on-chain firm says.
The highly anticipated Shanghai/Capella hard fork is scheduled to take place on 12-April-2023, enabling the withdrawal of staked #Ethereum.
— glassnode (@glassnode) April 11, 2023
In this extended edition of the Week On-Chain, we shall evaluate the overall Ethereum staking landscape, develop a framework to establish… pic.twitter.com/EVgsz3s6GG
In its recent report, Simulating Shanghai Sell-side: Investigating the Ethereum Unlock, Glassnode experts attempted to research the motivation and economic catalysts of various group of depositors who locked Ethers (ETH) into its proof-of-stake (PoS) contract.
In a detailed analysis, researchers simulated the behavior of large stakers, validators, solo stakers, "veteran stakers" who injected liquidity in 2020 and many other groups of Ethereum (ETH) investors.
As a result, three scenarios have arisen. The most "bearish" case, i.e., the maximum selling pressure on Ethereum (ETH), is associated with 1.54 million ETH ($2.93 billion) becoming liquid. At the same time, this is highly unlikely: the estimation of 170,000 Ethers (ETH) looks more viable thanks to a complex of economic estimations.
Given the Shanghai upgrade is widely expected and understood, based on this analysis, the unlock event is on a similar scale to day-to-day trade for ETH markets, and is therefore unlikely to be as dire as many speculate it to be.
As such, the crypto community should not be too bearish about the Ethereum (ETH) price's short-term dynamics.
Fewer risks for retail stakers
Based on these assumptions, the optimal scenarios can result in a 8% price drop at worst. To provide context, the collapse of FTX erased over 35% of Ether's (ETH) price.
As covered by U.Today previously, Ethereum's (ETH) Shanghai, or Shapella, upgrade is set to be activated in a few hours. It is the most crucial update for Ethereum (ETH) on its road to proof of stake.
While there are many concerns about a possible sell-off, top analysts stressed that the flexibility of Ethereum (ETH) staking will be a powerful derisking factor for small and medium potential investors.
Valeria Blokhina
Tomiwabold Olajide
Gamza Khanzadaev
