Today the Ethereum (ETH) Shapella update will launch. In phases, the more than 18 million ether, which are currently tied up in strike contracts, can be withdrawn. Concerns are expressed about the potential downward pressure on the Ethereum price that could arise if the ‘unlocked’ ETH is sold. According to the analysis company Glassnode, this is not too bad.
ETH selling pressure will be better than expected
Glassnode predicts namely that only 170 thousand ETH will be withdrawn from the staking contracts in the first week after the update. This is a fraction of the 18.1 million total tokens staked, with a total value of around $35 billion. According to the analytics company, only 253 strikers will withdraw their ETH. In addition, there are several mechanisms in operation that will prevent a wave of ether outflow.
Even if weekly withdrawals come in much higher than expected, it won’t have a dramatic impact on the ether price, says Glassnode.
“Even in the extreme case where the maximum reward and staked ETH are withdrawn and sold, the sales volume will still fit into the average weekly exchange inflow volume.”
The analytics company also shows that currently only 22 percent of ETH stakers are in a profitable position. The chance that the vast majority will sell their tokens at a loss seems small.
“Following the peak of $16 billion in unrealized losses in July 2022, net unrealized losses now stand at $4.6 billion. Especially the extremely large strikers are responsible for this. They are responsible for 76 percent of this.”
The highly anticipated Shanghai/Capella hard fork is scheduled to take place on 12-April-2023, enabling the withdrawal of staked #Ethereum.
In this extended edition of the Week On-Chain, we shall evaluate the overall Ethereum staking landscape, develop a framework to establish… pic.twitter.com/EVgsz3s6GG
— glassnode (@glassnode) April 11, 2023
Institutional interest in ethereum
Glassnode is therefore slightly optimistic. The CEO of the company Ether Capital, Brian Masoff, is also not very concerned. According to him, the Shapella update will lead to more strikers and investors. The ability to withdraw staked tokens will make it much more attractive to stake ETH, he believes.
It will also arouse the interest of even more traditional financial institutions. Currently, the threshold to invest in Ethereum, and crypto in general, is often very high. The Shapella update will make it possible to stake ether and keep liquid. According to Masoff, this is a very interesting option for institutional investors.