Ethereum (ETH) Shanghai upgrade could have this impact on Ether
- Ethereum analysts at Glassnode estimate that 170,000 ETH worth $317 million is likely to be unlocked and sold post Shanghai.
- Experts argue if maximum amount of rewards and stake are withdrawn and sold, the volume still falls within the range of average weekly inflow.
- Up to half of the total Ethereum staked in the ETH2 deposit contract is currently sitting on unrealized losses, and is likely not to be sold.
Ethereum Shanghai upgrade goes live in under sixteen hours, enabling ETH token withdrawals for holders. Experts at the crypto intelligence tracker Glassnode have estimated that at least $317 million in ETH will be unlocked, adding to the selling pressure on the asset.
Also read: Ethereum holders de-risk as ETH price rallies to $1,900 ahead of Shapella upgrade
Ethereum Shanghai to unlock at least 170,000 ETH
Ethereum analysts at Glassnode estimated the amount of staked ETH tokens that may be withdrawn and sold post the Shapella (Shanghai + Capella) upgrade. Experts evaluated the different cohorts of stakers and their motivations for selling ETH, to estimate the volume of ETH tokens that would hit exchanges post the event.
The team projected that only 100,000 ETH worth $190 million in accumulated rewards are likely to be sold. Only a limited amount of staked Ether will be released per day and nearly 70,000 ETH worth $133 million will become liquid.
Half of the total staked Ether is currently underwater
Of the total Ethereum staked in the ETH2 deposit contract, at least 50% is currently sitting on unrealized losses. Currently, the average deposit price of Ethereum staked in the deposit contract is $2,136, stakers are likely sitting on an unrealized loss of -13% on their stake.
Experts estimate that stakers sitting on unrealized losses might be reluctant to sell their ETH on exchanges. This reduces the expected selling pressure on the altcoin.
How much Ether will hit exchanges in the next two days
Analysts estimated that a minimum of 45,098 ETH worth $83.3 million will exit the ETH2 deposit contract on the Beacon Chain between April 12 and 14. This indicates a selling pressure of nearly $80 million across cryptocurrencye exchange platforms. There is a limit on the number of validators that can exit per day and there is a mechanism to protect against the rapid draining of staked ETH.
Taking these limitations into consideration, ETH community can expect upwards of 45,000 Ether flooding exchanges within the next 48 hours. Irrespective of the likely increase in selling pressure, Ethereum price recently climbed above the $1,900 level in an explosive move.
Will unlocked ETH increase liquidity and drive NFT demand?
NFT proponents and influencers are arguing that a percentage of unstaked Ether will make its way to NFTs. When the ETH2 Beacon Chain contract went live, ETH was removed from circulation and staked. In the meanwhile, the floor price of blue-chip NFT collections climbed steadily. Atareh.eth, an NFT proponent and analyst argues that the total maket capitalization of NFTs has climbed significantly since the launch of ETH staking.
ETH staking launch and NFT market cap
Despite tumultous events in crypto, NFTs have sustained in terms of growing market capitalization and activity. ETH token unlock could turn out to be bullish for blue-chip NFT projects and holders, if a percentage of unstaked ETH or capital from the sale of Ether flows into the sector.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
