Ethereum’s Shanghai Upgrade: Will Selling Pressure Follow $1 Million ETH Release?
- JPMorgan predicts selling pressure from the Shanghai upgrade with 1M staking rewards instantly available.
- Bank of America anticipates increased volatility around the event due to lower liquidity, exchange inflows, derivatives activity, and price action.
- Coinbase believes a sell-off in Ether on the back of this event should be relatively limited.
JPMorgan predicts selling pressure from the Shanghai upgrade as 1M staking rewards become instantly available. Coinbase believes sell-off will be limited, as per CoinDesk.
The upgrade, also known as Shapella, will allow validators to withdraw staked Ether and rewards that have been locked up.
JPMorgan predicts that Ether will face some selling pressure from the upgrade as more than one million Ether staking rewards become instantly available this week. If additional selling from staked Ether balances belonging to “troubled entities” is included, the selling pressure may be greater in the coming weeks, according to analysts led by Nikolaos Panigirtzoglou.
The bank expects Ether to underperform Bitcoin over the next few weeks. Meanwhile, Bank of America doesn’t expect the Shanghai liquidity event to drive Ether selling pressure directly. Still, it does anticipate increased volatility around the event due to lower liquidity, exchange inflows, derivatives activity, and price action related to the previous upgrade, the Merge.
Coinbase states that a sell-off in Ether on the back of this event should be relatively limited. Selling directly from this source may account for only about 1-2% of total average daily Ether trading volumes, and Coinbase says it is biased towards the lower end of that range.
ETH performance around the Shanghai Fork will be less dependent on technicals and more contingent on what “risk” is doing at the time. If the market sees risk assets selling off, investors may decide to unstake and sell Ether to de-risk. At the same time, institutions may not step in as aggressively on the buy side, according to analysts David Duong and Brian Cubellis.
The Ethereum community is closely monitoring the situation to see how the market will react to the upgrade. The Shanghai Fork is expected to be the last major upgrade before Ethereum transitions to Ethereum 2.0, which will see the network move from a proof-of-work to a proof-of-stake consensus algorithm.
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