4 - 6 minute read
The recently implemented Shapella upgrade to the Ethereum network could cause over $325 million worth of Ethereum to hit the open market, according to a recent Glassnode report. Glassnode analyst, Alice Kohn, examined staking cohorts to estimate the amount of ETH that is likely to be sold following the upgrade. Based on the report’s findings, Kohn predicts that around 170,000 ETH will be sold, with the number of exiting validators doubling post-Shanghai upgrade.
While this figure could rise to 1.54 million ETH if maximum accumulated rewards and stake are withdrawn, Kohn assures readers that even in the most extreme scenario, the sell-side volume will still fall within the average weekly exchange inflow volume. Thus, the impact on the price of ETH is expected to be acceptable.
The Shapella upgrade refers to the latest changes on Ethereum’s execution layer and consensus layer, following the transition from proof-of-work to proof-of-stake consensus mechanism. Validators can withdraw ETH from Ethereum’s proof-of-stake blockchain for the first time after the upgrade, signaling a shift in the network’s operations.
The ETH market could experience a short-term dip in prices following the influx of ETH, but the long-term implications point to a healthy market capable of withstanding an uptick in supply. The fact that the influx falls within the average weekly exchange inflow volume indicates that the market is adaptive and resilient, supporting healthy price consolidation in the long term.
Furthermore, the Glassnode report provides insight into investor conviction and profitability, key factors that determine the direction of future market moves. Investors with greater conviction in Ethereum’s potential are likely to buy into the market following the upgrade, while those with lower confidence may sell their assets. Additionally, profitability is an essential indicator of the market’s trajectory, as it signals investors’ returns on their initial investments.
In conclusion, the Shapella upgrade presents both opportunities and risks for traders. While the influx of ETH could initially cause a dip in prices, the market’s inherent resilience indicates that the implications of the upgrade are favorable in the long term. Investors should keep an eye on investor conviction and profitability to gauge the direction of the market following the influx of ETH. The Ethereum network’s pursuit of innovation and improvement bodes well for the future of the asset.
The Bottom Line
The recently implemented Shapella upgrade to the Ethereum network could cause an influx of over $325 million worth of ETH into the market. Glassnode predicts that around 170,000 ETH will be sold following the upgrade, which would fall within the average weekly exchange inflow volume. While there could be a short-term dip in ETH prices, the long-term implications of the upgrade point to a healthy market capable of withstanding an uptick in supply. It’s crucial for traders to monitor investor conviction and profitability to determine the direction of the market following the influx of ETH. Ultimately, Ethereum’s pursuit of innovation and improvement bodes well for the future of the asset.