Will Ethereum’s (ETH) Shapella Upgrade Trigger A Sell-Off Or Bull Run?
April 05 2023 - 3:18PM
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The upcoming Shapella upgrade for Ethereum (ETH) is set to
introduce several new features to the network, including the
ability for users to withdraw their staked ether. While this is a
new milestone for Ethereum users, there is some concern about
whether it can lead to a sell-off and potentially result in a
decline in Ethereum’s price action. Related Reading: Whale
Accumulates 229 Billion Shiba Inu Tokens, What’s Next? Significant
Market Activity Ahead Of The New Upgrade For ETH As Ethereum’s
Shapella upgrade approaches, investors are speculating about the
potential impact on Ethereum’s price action and the timing of the
anticipated bull run. One area of concern is the ability for users
to withdraw staked ether, which could lead to a decrease in demand
for the cryptocurrency and trigger a drop in its value. The
uncertainty around how many users will take advantage of this new
feature and how much ether will be withdrawn from the network adds
to the concern. A recent report by the formerly known Arcane
Research, now K33 research firm, suggests that the upcoming
Shapella upgrade for Ethereum could lead to the sale of around 1.3
million ETH, with a total value of approximately $2.4 billion. Most
of this is expected from reward withdrawals, with an estimated 1.1
million ETH being sold. Additionally, the report suggests that
around 158,000 ETH could be sold as part of the bankruptcy
proceedings for collapsed crypto lending platform Celsius. This
could put downward pressure on ETH’s price, particularly if they
are sold in large quantities. Furthermore, according to
Satoshi Club, another factor contributing to the potential sell-off
is the recent Wells Notice received by the cryptocurrency exchange
Kraken. The notice requires Kraken to comply with US securities
laws and regulations, which could result in the exchange unstaking
all ETH held by US investors. Will ETH’s Support Levels Hold
A Potential Sell-Off? While the report suggests that the upcoming
upgrade for Ethereum could lead to the sale of approximately 1.3
million ETH, some factors may mitigate the potential impact on the
market, according to Satoshi Club. The estimated 1.3 million
ETH represents only around 20% of ETH’s average daily trading
volume. This means that the selling pressure will not likely
overwhelm the market, and buyers will have the opportunity to match
the volume of ETH sold. Furthermore, withdrawing staked ether
is not instantaneous and can take 5 to 6 days to complete. This
means the selling pressure will likely spread over several days.
This can help to prevent sharp price drops and allow the market to
adjust to the increased supply of ETH. Additionally,
according to Satoshi Club, Mac Eberhardt, an analyst at Saxo Bank,
has suggested that most of the stakers are long-term investors
committed to the Ethereum Network and its future growth. This means
that they are unlikely to sell their holdings in response to
short-term market fluctuations or the ability to withdraw staked
ether. As of this writing, Ethereum’s price continues to show
strength, trading at $1,890 with a 1.4% gain in the last 24 hours.
In extreme selling pressure, the $1,830 level could serve as a
threshold for ETH, potentially preventing a significant drop in
value. Additionally, a consolidation above the $1,900 level may
help to mitigate the selling pressure ahead of the Shappella
upgrade. Related Reading: Bearish Signal? Whale Transfers Over
70,000 ETH To Exchange Featured image from Unsplash, chart from
TradingView.com
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