Ethereum’s upcoming upgrade, called Shapella, which is scheduled for April 12, has raised many questions in the cryptocurrency community about what it might mean for the second largest cryptocurrency. There have been suggestions that this update, which will enable validators to withdraw their stacked ether (ETH), will negatively affect the price of the coin.
CryptoQuant’s ETH Analysis – A Ray of Hope
According to speculation, if cryptocurrency holders decide to sell their cryptocurrency holdings for profit, this could lead to a drop in market demand and a subsequent drop in the price of Ethereum.
However, despite this possible outcome, CryptoQuantA data analysis firm calmed concerns, saying the selling pressure may not be significant. The company argues that, based on its P&L analysis, there is likely to be little selling pressure on ETH as a result of withdrawing withdrawals after the upgrade.
The company anticipates that there will not be much selling pressure as most of the ETH (9.4 million ETH, or 52% of the total) is currently at a loss. On the other hand, the company notes that the average depositor in the largest pools also suffers losses.
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In this context, it is unlikely that these market participants will sell ETH at the current price and make a profit or fully recover their investment. This is because they invested in these activities when the cryptocurrency was trading at a higher value than it is currently. according to CoinMarketCapThe current price of ETH is around $1,800.
Moreover, the company highlights that the lucrative ETH, which is currently making a profit, generates a yield of 30% or less, which they consider to be relatively low compared to the large profits that the Ethereum market can sometimes provide through its price volatility.
Accordingly, CryptoQuant asserts that “selling pressure arises when market participants make huge profits,” which is not currently the case for stacked ETH. This means that there may not be a significant drop in the price of ETH due to the Shabella update.
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Ethereum price has surpassed $1,900, its highest price in 8 months
On Wednesday, April 5, 2023, the price of ether (ETH), the cryptocurrency of the Ethereum network, surged above $1,900, a level not reached in 8 months. The last time ETH hit this price point was on August 15, 2022. In contrast, Bitcoin (BTC), the leading cryptocurrency in the market, has not seen a similar increase. according to TradingViewBTC price briefly touched $29,000 twice during the last two weeks of March 2023.
The fact that ETH is seeing an increase while BTC is not indicates that the current increase in the price of ETH is not driven by the movement of BTC, which is usually the case. Instead, it is driven by the internal Ethereum market. according to Analyst Miles DeutscherThis is because investors are showing interest in ETH in anticipation of the upcoming Shanghai (Shabella) update.
Shapella marks a significant change that Ethereum will implement on its network on April 12, enabling pooled funds to be withdrawn. Therefore, the anticipation of this event may have contributed to the recent increase in the price of ETH. Moreover, various players in the industry, incl Binance US And Huobi, I have taken the initiative to remind the public of the upcoming update this week.
Featured image from istock.com, chart from Tradingview.com.