Ethereum Shanghai Upgrade / Shapella Hard Fork is here: Report

Ethereum to bring much-awaited Shanghai upgrade / Shapella Hard Fork on April 12.
People are ambiguous about its effects on the market.

Ethereum is coming up with the Shanghai upgrade on April 12; investors and analysts are ambiguous about the results. Ethereum requires its validators to lock or stake their ETH for the blockchain’s functioning, and they are rewarded with ETH over time. These staked ETHs cannot be un-staked. The Shanghai upgrade would allow un-staking while providing efficiency to the blockchain.

What Will Shanghai Upgrade or Shapella Hard Fork Do?

When the update goes live, approximately 15% of all Ethereum in circulation shall be available for un-staking. Masses have different thoughts about its possible effect; some feel this could bring a negative influx and drop the value considerably. In comparison, bulls think the Shanghai upgrade would encourage staking.

After the Shanghai upgrade, Ethereum is expected to reveal “sharding.” This would break the larger blockchains into smaller parts; after that, the capacity to handle transactions per second would noticeably increase, with a considerable drop in gas fees.

Shapella Hard Fork / Shanghai Upgrade Could Invite Sell-off

With the Shanghai upgrade or Shapella hard fork around the corner, the market seems afraid of the scenario where ETHs deposited on the network have been unlocked in the name of boosting security, which could invite holders for the liquidation of their tokens. Observers feel that the supposed selling pressure could be in billions of dollars.

Analysts say approximately 1.1 million ETH would come for withdrawal, and Celsius might sell their 158k staked balance to help their bankruptcy process. These two alone amounts to nearly 1.3 million ETH, or around $2.4 billion. Dealing with such intense selling pressure would not be easy for the Ethereum blockchain.

Is the Phobia Legit?

Although people claim impending influx and drop in ETH, the study shed light on the brighter side. Not every staker is expected to un-stake their assets all at once, but still, a partial withdrawal is supposed to take 5 to 6 days, while a full withdrawal is supposed to take anywhere from three weeks to four months.

In simpler terms, the much-hyped selling pressure force will be distributed in multiple days, where buyers can also match the selling pressure. There is already a fair limit of 16.27 million ETH per day, which could distribute the selling pressure over a longer period. Researchers found that the majority of stakers are, in fact, long-term investors and are not likely to liquidate their holdings.

Ethereum Prices are Rising as Shapella Nears

As the Shapella hard fork is nearing, ETH is experiencing a wave of positive sentiments supported by upward-moving EMA. If the signals from MACD were also towards the north, then chances for a rally would have been great. The price is closer to the supply zone and might enter or consolidate between immediate support present at 1717.77.

After the launch of Shapella, the prices could go either way; if it drops below immediate support, it might enter the demand zone, but a clean breakdown is highly unlikely.

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing