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Ethereum (ETH) Shanghai Might Have Little Effect on Price: Glassnode

Wed, 04/12/2023 - 13:50
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Vladislav Sopov
Experts at Glassnode, leading on-chain analytics team, shared their analysis of much-anticipated Shanghai upgrade and its potential effects on ETH price
Ethereum (ETH) Shanghai Might Have Little Effect on Price: Glassnode
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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.

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.

What is Shapella Upgrade in Ethereum (ETH): Guide

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.

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About the author

Blockchain Analyst & Writer with scientific background. 6+ years in IT-analytics, 3+ years in blockchain.

Worked in independent analysis as well as in start-ups (, Monoreto, Attic Lab etc.)