Only 3 days until the Shapella update. With the upgrade scheduled for April 12, a large amount of Ethereum (ETH) staked in December 2020 will be released. So, how can the Ethereum price be affected?
Could Shapella update negatively affect ETH price?
The upcoming Ethereum upgrade, called Shapella, scheduled for April 12, has raised many questions in the crypto community about what it could mean for the leading altcoin. There are suggestions that this update, which will cause validators to withdraw their staked ETH, will negatively affect its price.
According to speculation, if staking investors decide to sell their ETH for profit, this could lead to a drop in market demand and subsequently a drop in Ethereum prices. But despite this likely outcome, CryptoQuant, a company specializing in data analytics, has calmed fears by saying that selling pressure may not be significant.
“We may see minimal selling pressure”
Based on its profit and loss analysis, the company argues that there may be minimal selling pressure on ETH from staking withdrawals after the upgrade.
At the same time, he predicts there will be no significant selling pressure. This is because most of the ETH staked (9.4 million ETH, equivalent to 52% of the total) is currently at a loss. On the other hand, the company points out that the average depositor in the largest pools also suffers losses.
In this context, it is unlikely that these market participants will sell their ETH at the current price and make a profit or get back their entire investment. This is because investments continue while Ethereum is trading at a higher value than it is now.
CryptoQuant also highlights that staking ETH currently in profit produces returns of up to 30% or less. Based on this, he highlights that “selling pressure arises when market participants make excessive profits,” which does not currently apply to staked ETH. This means that there may not be a significant drop in the price of ETH due to the Shapella update.
Ethereum price surpasses 8-month high of $1,900
ETH price broke above $1,900 on Wednesday, April 5, 2023, a level it hasn’t reached in 8 months. The last time ETH reached this price point was August 15, 2022. By contrast, the market’s leading cryptocurrency, Bitcoin (BTC), has not seen a similar rise. According to TradingView, the price of BTC briefly reached $29,000 twice in the last two weeks of March 2023.
The fact that ETH is experiencing a spike while there is BTC does not indicate that the current price increase of ETH is not due to the movement of BTC, which is usually the case. Instead, it is driven by the internal Ethereum market. According to analyst Miles Deutscher, this is because investors are showing interest in ETH in anticipation of the upcoming Shanghai (Shapella) update.
Shapella represents a significant change that Ethereum will implement on its network on April 12, which will result in the withdrawal of staked funds. Therefore, the anticipation of this event may have contributed to the recent surge in ETH price. Also, various players in the industry, including Binance USA and Huobi exchanges, took the initiative to remind the public of this week’s update. cryptocoin.com In this article, we answered questions such as how much ETH will be released on April 12 and which companies can sell.
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