Shapella Upgrade’s Impact on Ethereum: Minor Sell-Off Anticipated

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On-chain analysts foresee a minimal Ethereum sell-off after this week’s long-awaited Shapella upgrade. Despite concerns surrounding the release of staked Ethereum, on-chain analytics firm Glassnode maintains a more optimistic outlook.

The Highly Anticipated Shapella Upgrade

The Ethereum network is set to undergo its much-anticipated Shapella upgrade at block 6209536 on April 12. The upgrade has stirred up considerable discussions among analysts and traders, with some expressing concerns that a significant amount of ETH might be sold on the markets.

Contrary to these fears, Glassnode’s report on April 11 suggests that only a small fraction of staked Ethereum will be sold after the upgrade. The firm estimates 170,000 ETH intended for sale following the Shapella upgrade. 

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Moreover, they project that a mere 100,000 ETH of the total accumulated rewards will be withdrawn and sold. Glassnode adds, “Furthermore, we expect to see twice as many validators exiting, but only a limited amount of stake will be released per day.”

Limited Liquidation of Staked Ethereum

According to Glassnode, only around 70,000 ETH of the abovementioned amount will become liquid. This figure represents less than 1% of the entire staked amount of 18 million ETH. Therefore, the analytics firm believes the impact on Ethereum prices will be “acceptable even in the most extreme case.”

The report highlights that staking providers, including centralized exchanges and liquid staking platforms, account for over two-thirds of all staked ETH. Lido currently dominates the market, with 5.9 million ETH staked and a share of approximately one-third. However, Glassnode notes that very few staking providers have withdrawn their validators.

Profitable Ethereum Stakes and Realized Prices

Glassnode also reveals that about half of all staked Ethereum is in profit. The realized price for all deposits is $2,136, while the ETH realized price is $1,403. 

The Shapella upgrade introduces two withdrawal options: partial and full. Partial withdrawals remove the validator’s staking rewards, reducing the balance to 32 ETH, whereas full withdrawals shut down the validator and remove the entire staked balance. 

Early stakers who have accumulated rewards for over two years could see substantial returns.

Predicted ETH Exits Between April 12 and April 14

Considering the current exit queue, Glassnode anticipates at least 45,098 ETH exiting the Beacon Chain between April 12 and April 14. 

The firm concludes that the exit and withdrawal process’s design will limit any significant impact on ETH prices. Glassnode adds, “Based on our analysis, the impact on the Ethereum economy is expected to be much less dramatic than many have painted it to be.”

In light of Glassnode’s analysis, the Ethereum market is more resilient than some might have initially thought. As a result, the Shapella upgrade’s impact on Ethereum prices is expected to be minimal, with only a minor sell-off anticipated.

This optimistic outlook showcases the strength and stability of the Ethereum network as it undergoes this significant milestone.

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