The Shapella upgrade in the second-largest cryptocurrency Ethereum, scheduled for today, will unlock stacked ETH, and investors can access those tokens today.
The highly anticipated software upgrade by investors on the Ethereum blockchain will increase the circulating supply of ETH tokens, which currently stands at 120.5 million ETH.
According to Dune Analytics, around 15% of all tokens holding ETH have been staked for the past three years, worth more than $33 billion at the current market valuation.
Although Ethereum price hit a new 2023 high this week, at press time, Ethereum price is trading down 2.3% at $1873 against the dollar pair.
Some analysts believe that adding 17.9 million ETH tokens to the supply could result in a massive sell-off. However, at present, ETH staked on the Beacon chain, amounting to 1% of the total, will be unlocked within the first week, setting back the possibility of massive sell off to a later date.
Data from analytical firm CryptoQuant shows that more than half of the Ethereum stack (about 9.74 million STETH) is at a loss, so perhaps all of them could be sold after the Shanghai upgrade.
Sreejith Das, the CEO of Attestand, suggested that within a week of the blockchain’s redesign, up to 1.1 million Ether would be available for redemption.
At the current Ethereum price, the withdrawal is estimated to be around $2 billion, which could increase volatility in the market.
Robert Quartly-Janeiro, Chief Strategy Officer at crypto exchange Bitrue, cannot predict the next move in the present atmosphere. Also, he added, “The only thing certain is that the Shanghai hard fork will bring about some short-term volatility.”
A summary of the Shanghai upgrade
The term “Shanghai” and “Capella,” two of the major Ethereum expansion plans, are combined to form the Shanghai upgrade, also referred to as the Shapella upgrade.
The hard fork of Ethereum, called the Shanghai upgrade, will incorporate various changes, including the crucial Ethereum Improvement Proposal (EIP) – 4895, allowing Ethereum validators and stakeholders to withdraw staked ETH tokens from the Beacon chain.
