The long-awaited Ethereum Shanghai upgrade is now available. On Wednesday night, a new feature was expected to roll out that will finally make it possible to withdraw Ethereum that has been staked on the network.
Shanghai upgrade is live
Some have hypothesized that the price may drop temporarily when the upgrade is released. That would happen if many people who staked their Ethereum decided to unlock it and sell, which could create enormous selling pressure.
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After all, 17.52 million ETH have been staked, which is about 15% of the total supply. However, not everyone might want to sell. Instead, many may choose to continue to stake and earn rewards in the long run.
The long-awaited transition from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) one has reached its destination. When considering efficiency, the PoS approach is superior, as it reportedly saves over 99% of energy when compared to mining.
Additionally, it validates crypto transactions using staked ETH and validators that are selected at random. The primary purpose of the Shanghai and Capella updates to the network is withdrawal functionality.
You might want to read this: What is the difference between cryptocurrency mining and staking?
According to TokenUnlocks, more than 800,000 ETH is pending to be withdrawn from the network. This is worth around $1.6 billion, which represents 0.66% of Ethereum’s market cap. However, the estimated withdrawal in the next 12 hours is 87,000 ETH, which is $167 million.
Although it might cause Ethereum to fall, it’s not such an enormous selling pressure as the daily trading volume is now at $13 billion. At the time of writing, Ethereum is closing in on $2,000 for the first time since August 2022.
Ethereum daily chart, source: tradingview.com
Conclusion
While the Shanghai upgrade will cause a lot of Ethereum withdrawals, the amount doesn’t represent a concerning sum. There’s enough liquidity and no reason to panic. Nevertheless, the resistance at $2,000 could stop Ethereum’s uptrend, at least in the short term.
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