- The Ethereum price has been falling since hitting its ATH around $4,800 in November 2021.
- According to an analysis provided by Arcana, approximately $1.2 billion of ETH could hit the market in each of the first three days after allowing withdrawals.
The Ethereum (ETH) ecosystem is readying to make over 17 million staked ethers withdrawable through the upcoming Shanghai upgrade. After the United States Securities and Exchange Commission indicated that cryptocurrency staking programs are unregistered securities, speculation has been ETH will record increased sell pressure in the short term. However, according to Nick Hotz, vice president of research at digital asset investment firm Arca, the net outflow will be cancelled out by new stakers, thus reducing the overall selling pressure.
With the total Ethereum (ETH) staked by over 532k validators increasing by the day, analyst interviews by media outlet Coindesk believe more coins will be staked after the Shanghai upgrade.
Furthermore, the Ethereum staking industry offers an annual percentage rate of about 5.2 percent.
Closer look at Ethereum post Shanghai upgrade
The Ethereum price has been on a falling trend since hitting its ATH around $4,800 in November 2021. Up over 30 percent YTD, the Ethereum price is retesting the upper bound of the falling trend. As the Shanghai upgrade nears, speculations on the next Ethereum move are expected to heighten its volatility.
Moreover, some crypto traders believe the Shanghai upgrade will induce further selling pressure, while others think the contrary.
Arca’s Hotz said the impact of ETH outflows would not be immediate because withdrawals must endure a so-called queue. “This means only 10 per cent of the total amount of staked ETH can be removed from the pool in a month,” he said. “So, you will have a churn.”
John “Omakase” Lo, head of digital assets at investment firm Recharge Capital, said people would not rush to exit staking as they will need time to understand how Shanghai works.
There will be a period while investors will digest how withdrawals work,
Rich Falk-Wallace, chief executive of institutional crypto data platform Arcana, said the key driver of ETH price action would be what narrative the market creates about the long-term outlook based on the short-term behaviour.
“If stakers steadily withdraw and do not show interest in validating the network, that would be bearish,” he said.
If ETH staking percentage continues to grow post-Shanghai, that is a net positive.
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According to an analysis provided by Arcana, approximately $1.2 billion of ETH could hit the market in each of the first three days after allowing withdrawals. The figure represents only 6 per cent of the Ethereum daily average traded volume.
As a result, the selling pressure is expected to be under control and minimal due to new stakers. With 60 percent of the staked Ethereum at a loss, according to CryptoQuant, analysts expect minimal selling pressure as investors wait to return in profit.
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