Ethereum Activated the Awaited Upgrade Shapella

Ethereum (ETH) has created the eagerly awaited option to withdraw coins deposited for staking by activating Upgrade Shapella. The update, also known as Shanghai, had been in preparation since Ethereum’s protocol change “The Merge” in October 2022.

The background is that Ethereum had offered the possibility of staking ETH since the end of 2020 as part of the run-up phase for “The Merge” – but the withdrawal of these tokens was blocked and has only now been unlocked again. Around 15 percent of all ETH with a market value of $34 billion was “parked” in staking as of yesterday’s deadline. As a result, analysts at Glassnode have conducted an in-depth report to determine whether Shapella might not lead to sell-offs and thus affect Ethereum’s price curve.

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Glassnode concludes that the price curve of Ethereum is not expected to react greatly to Shapella

Glassonde assumes that with at most 170,000 of the staked 18 million ETH, the owners would have the intention to turn staked Ethereum and staking bonuses into cash now. It would have to be taken into account: Only about 50 percent of ETH stored in staking pools are currently worth more than when they were deposited. This means that a large proportion of ETH stakers no longer have a direct incentive to stop staking.

In addition, Glassnode reminds us that staked Ethereum could already be turned into liquidity by providers such as Lido Finance using wrapped tokens before the Shapella upgrade. In addition, it was observed that participants in ETH Staking had very often deposited additional Ethereum over the past 28 months and were therefore probably pursuing long-term investment strategies.

Thus, Glassnode concludes that the price curve of Ethereum is not expected to react greatly to Shapella. This coincides with reality: Ethereum actually increased in price by about 2 percent in the last 24 hours with high trading volume. The markets easily absorbed the first ETH, which was lifted from staking and sold. The Etherscan data service counted around 80,000 ETH already out of the staking on Thursday morning.

Conclusion: Ethereum is optimistic after Upgrade Shapella

Important for Ethereum investors: those who have staked ETH via Lido or crypto exchanges such as Binance and Coinbase must contact the respective provider to find out how withdrawals are handled after the Shapella upgrade. Since many orders for unstaking are raining down on Ethereum’s network, waiting times have to be taken into account. This also has the (intended) effect that ETH and Staking bonuses intended for sale now will not be brought to the market in a concentrated form, but that this momentum will be spread over the coming days and weeks.

Putting together the facts and expectations about the Shapella upgrade, the current conclusion is that fears that Ethereum’s price curve would suffer from Shapella and sell-offs have not been realized. ETH is holding its own and the developers are now focusing on the upcoming update in the direction of Ethereum 2.0, where the capacities in the ecosystem are to grow massively through sharding.

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