Ether (ETH), the second-largest cryptocurrency by market capitalization, is set to undergo a major upgrade known as the Shanghai upgrade. The much-awaited upgrade has garnered mixed reactions from analysts at traditional banks, with some predicting a negative impact on the market. However, on-chain data analytics firm, Glassnode, has estimated at least $300 million worth of selling pressure, which may not have a significant impact on the overall price of ETH. In this article, we delve into the impact of the Shanghai upgrade on the ETH market and explore the insights provided by Glassnode’s on-chain data analysis.
The Impact of Shanghai Upgrade on Ether (ETH) Market: Analysis and Insights
The Shanghai upgrade, also known as the Shappella upgrade, is a significant upgrade to the Ethereum blockchain. This upgrade aims to improve the overall performance of the blockchain and provide more flexibility for investors to withdraw their staked ETH. However, the upgrade has also raised concerns among analysts, with some predicting a negative impact on the market. In this article, we analyze the impact of the Shanghai upgrade on the ETH market and provide insights from Glassnode’s on-chain data analysis.
Glassnode’s On-chain Data Analysis
Glassnode’s on-chain data analysis provides valuable insights into the impact of the Shanghai upgrade on the ETH market. According to the report, Glassnode estimates a total of 170K ETH intended to be sold after the Shanghai upgrade. The report further states that only 100K ETH ($190M) of the total accumulated rewards will be withdrawn and sold. This estimate was made based on a “50% withdrawal credential update, our segmentation of depositors, and assumptions regarding investor conviction, and profitability” by using wallet behavior, period of staking, and the presence of liquid staking derivative products such as Lido.
Potential Selling Pressure
Banks such as JPMorgan predict that ether will likely face some selling pressure from the upgrade as more than one million ether staking rewards become instantly available this week. Furthermore, potential additional selling from staked ether balances that belong to “troubled entities” may increase the selling pressure in the coming weeks, as analysts have predicted.
Impact on Ether Prices
Despite the potential selling pressure, Glassnode predicts that bulls may have little reason to fear as the selling pressure is likely to be absorbed quickly and have a smaller overall impact on ether prices. The report states that even in the extreme case where the maximum amount of rewards and stake are withdrawn and sold, the sell-side volume still falls within the range of the average weekly exchange inflow volume. Therefore, Glassnode concludes that even the most extreme case will have an acceptable impact on the price of ETH.
Insights from Glassnode
According to Glassnode, as many as 1,229 validators have already signed a voluntary exit message to signal their wish to unstake tokens after the Shapella upgrade. This data provides insights into the sentiment of investors and their willingness to withdraw their staked ETH after the upgrade. Additionally, the report highlights the importance of on-chain data analysis in providing valuable insights into market trends and investor behavior.
The Shanghai upgrade is a significant event for the ETH market, and its impact has been a topic of debate among analysts. Glassnode’s on-chain data analysis provides valuable insights into the potential impact of the upgrade on the market. While some selling pressure is expected, Glassnode predicts that the impact on the overall price of ETH is likely to be small. Furthermore, the data on voluntary exits signals investor sentiment and provides insights into market trends. The Shanghai upgrade is an important event for the ETH market, and its impact will continue to be monitored closely by analysts and investors alike.
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