On-chain analysts have predicted that there would likely only be a minor Ethereum sell-off following the long-awaited Shapella upgrade this week.
The big moment is here. The Ethereum network will undergo its highly anticipated Shapella upgrade at block 6209536 on April 12.
The phased release of staked Ethereum has caused a stir among analysts and traders. Some are fearful that a lot of ETH will be sold to markets, but on-chain analytics firm Glassnode believes otherwise.
On April 11, the firm reported that just a tiny fraction of staked Ethereum would be sold after the upgrade.
“We estimate a total of 170k ETH intended to be sold after the Shanghai upgrade.”
Staked Ethereum to Remain Staked
It projected that only 100,000 ETH of the total accumulated rewards would be withdrawn and sold. “Furthermore, we expect to see twice as many validators exiting, but only a limited amount of stake will be released per day,” it added.
Only a fraction of that amount, around 70,000 ETH, will actually become liquid, according to Glassnode. The total figure represents less than 1% of the entire staked amount of 18 million ETH.
Even in the most extreme case, the impact on Ethereum prices will be “acceptable,” according to the analytics firm.
It noted that staking providers such as centralized exchanges or liquid staking platforms represent more than two-thirds of all staked ETH. Lido is currently the most dominant, with 5.9 million ETH staked and a share of around a third.
However, very few staking providers have withdrawn their validators, it noted.
It also reported that around half of all Ethereum staked was in profit. Additionally, the realized price of all deposits is currently $2,136, whereas the ETH realized price is $1,403.
The upgrade also allows for two types of withdrawals, partial and full. Partial withdrawals remove the validator’s staking rewards, reducing the balance to 32 ETH. Full withdrawals shut down the validator removing the entire staked balance.
Moreover, early stakers have accumulated rewards for over two years, so they could be substantial.
Minimal Impact
Looking at the current exit queue, Glassnode predicted, “We will see at least 45,098 ETH exiting the Beacon Chain between April 12 and April 14.”
Glassnode concluded that the design of the exit and withdrawal process would limit any major impact on ETH prices, adding:
“Based on our analysis, the impact on the Ethereum economy is expected to be a lot less dramatic than many have painted it to be.”
ETH prices have retreated 3% on the day, and it was changing hands for $1,868 at the time of writing.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions.
Source: https://beincrypto.com/no-ethereum-sell-off-projected-shapella-on-chain-analysis/