Would Ethereum Shanghai Upgrade Boost Its Price in Future?

The Ethereum Shanghai upgrade is estimated to happen sometime Q1 2023.
After the upgrade, the staked ETH will be enabled.

The popular community-run technology that is powering its cryptocurrency ether (ETH) along with thousands of decentralized applications. It has pioneered the concept of a blockchain smart contract platform. That will allow it to execute smart contracts using the blockchain, which further reinforces the already existing benefits of smart contract technology.

Ethereum Shanghai Upgrade

Being progressive, the Ethereum network is all-set to its next upgrade. As the blockchain network is ready for its biggest upgrade since The Merge, which was the first part of Ethereum’s switch from proof-of-work (PoW) to proof-of-stake (PoS).

After the Merge, the old Ethereum chain became the Beacon Chain. And after the Shanghai upgrade the stakers will be able to unstake ETH and withdraw ETH rewards from the Beacon Chain.

The Ethereum Shanghai upgrade is a hard fork that implements EIP-4895, which hardcodes the new unstaking policy into Ethereum. Following the upgrade, the validators have been able to stake ETH since December 2020 when the Beacon Chain got released. The withdrawals on the Zhejiang testnet enabled as of February 7th, 2023 while in the next month 16.5 Million ETH will become available for withdrawals on the mainnet.

So after the Shanghai upgrade, Ethereum would become a true proof-of-stake chain. And the ETH stakers can finally get the option to liquidate their staked ETH without relying on liquid staking derivatives. The stakers and validators will be able to unstake ETH themselves.

Moreover, as a blockchain Ethereum reduces its tech risk after the Shanghai upgrade. So that more stakers are expected to flock to Ethereum since they will be able to stake natively with the L1, without added smart contract risk or staking restrictions.

The Shanghai upgrade enables withdrawals; only six validators per epoch can make a complete withdrawal. While an epoch is 6.4 minutes for Ethereum which means almost 1,300 validators can withdraw per day that equates to around 43,000 ETH per day.

On the other hand, Shanghai upgrade enables partial withdrawals, that is the withdrawals of the rewards earned on the 32 ETH collateral. It is around 2 ETH per validator that yields 1 million ETH that can be withdrawn partially as there are more than 500K validators. However this is equal to 10% of the daily trading volume of ETH.

Ethereum Price Analysis

The price of ETH is currently trading at $1,689.74 with a 24-hour trading volume of $7.78 Billion. However, Ethereum is down 0.54% in the last 24 hours, with a market cap of $206.77 Billion. As the Shanghai upgrade is targeted for the next month so a good price movement can be expected in ETH. And the volatility of ETH could increase following the Shanghai upgrade.