Ethereum Trades Flat Following Shanghai Upgrade: What’s Next for Investors?

Key Points:

• Ethereum price remains stable after Shanghai upgrade implementation.
• ETH stayed steady despite expectations of a sharp drop in price.
• Majority of staked ETH already liquid, minimizing impact of upgrade on economics.

Ethereum’s Shanghai upgrade enabled staked ETH to be withdrawn by the network’s participants, the price of ETH remained mostly unchanged, even slightly increasing.

This lack of significant change in price is significant because traders often buy up stocks or cryptocurrencies in anticipation of a major event impacting that asset, then sell it off en masse once the event occurs. However, this did not happen with Shanghai, unlike the case with the September merge event, which resulted in an 8% drop in ETH price immediately following the news.

Although significant to the Ethereum ecosystem, Shanghai did not seem to have the same impact on ETH. The upgrade completed Ethereum’s shift to a proof of stake network by enabling the withdrawal of staked ETH from the network, which was previously inaccessible. This shift to proof of stake is significant because users stake ETH with the network to validate on-chain transactions and are rewarded for that participation with newly generated ETH. Shanghai also unlocked the $35 billion worth of ETH deposited with Ethereum.

Despite the upgrade’s significance, it did not cause ETH prices to drop, which was widely expected. One reason for this may be that the majority of staked ETH has been deposited with Ethereum through intermediary staking pools and centralized crypto exchanges, many of which issue staking tokens to customers. Therefore, much of the capital supposedly kept hostage pre-Shanghai has actually been liquid for some time.

Moreover, Matthew Niemerg, co-founder of privacy-enhancing blockchain network Aleph Zero, recently stated that the market had already priced in the upgrade, which could explain the lack of significant impact on ETH prices. Additionally, unlike the September merge event, which saw ETH prices drop 10% in the five days preceding the event, ETH prices actually climbed 3% in the five days leading up to Shanghai.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Annie

Coincu News