Shanghai Upgrade Sets Off $300M Ether Sell-Off: Glassnode Report

In the Brief:

  • The Shanghai upgrade of Ethereum may result in $300 million worth of Ether sold
  • This won't impact ETH's price significantly since it's within the average weekly exchange inflow volume
  • Investor sentiment won't be affected by the upgrade, so bulls need not worry
  • But, staked ETH balances of troubled entities sold-off could cause more significant selling pressure

3 - 4 minute read

The much-anticipated Shanghai upgrade of the Ethereum blockchain is expected to happen today, and some analysts predict that it will result in a huge selling pressure of Ether (ETH) in the immediate future. According to Glassnode, an on-chain report, the Shanghai upgrade could result in the selling pressure of up to $300 million worth of ETH. The report estimates that about 170,000 ETHs might be sold off after the upgrade, with only about one-third of that number being withdrawn and sold as accumulated rewards.

The findings of the Glassnode report are based on various factors, including the withdrawal behavior of investors and the presence of liquid staking derivative products, like Lido. The report concludes that the sell-side volume will still fall within the range of the average weekly exchange inflow volume, indicating that the price of ETH will not be significantly affected.

Moreover, only a minor reduction may impact the price of ETH, even if the maximum amount of stake and rewards are withdrawn and sold. The Glassnode report also forecasts that investor conviction is unlikely to alter after the upgrade, which means that bulls may not need to be concerned about the potential sell-off in the short term.

However, some analysts believe that the selling pressure could be more significant, particularly if staked ETH balances belonging to troubled entities are also sold-off over the coming weeks. JPMorgan analysts recently predicted that ether would face some selling pressure from the upgrade, which CoinDesk recently reported. The bank expects ether to underperform Bitcoin (BTC) over the next few weeks.

Investors will be able to withdraw their staked ETH on the Ethereum blockchain following the Shanghai upgrade, which will likely result in an instant availability of more than one million ETH staking rewards this week. Glassnode has noted that 1,229 validators have already signed a voluntary exit message, signaling their intention to unstake tokens after the Shapella upgrade.

This development is indicative of the volatility in the crypto market and highlights the importance of paying close attention to blockchain developments. Traders need to evaluate the potential impact of blockchain upgrades on cryptocurrency prices continually.

The Bottom Line

The glassnode report on the potential selling pressure of ETH following the Shanghai upgrade is significant as it sheds some light on the expected impact of the blockchain upgrade on the long-term prospects of ETH. However, the report highlights that even if the maximum number of stake and rewards are withdrawn and sold, there will be no significant impact on ETH’s price. The market remains volatile, and traders must remain vigilant of developments in the blockchain space to identify possible buying and selling opportunities.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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