The Ethereum Shanghai Upgrade is Coming. What Will Happen to ETH Price?
The Ethereum Shanghai upgrade, also known as Shapella, is set to go live on April 12, according to a recent announcement by the network's developers. The upgrade includes Ethereum Improvement Proposal (EIP) 4895, which will allow users to withdraw their staked Ether from the Beacon Chain, increasing market liquidity and making it easier for users to access their funds along with three additional improvements aimed at optimizing gas costs for specific activities
Before the mainnet launch, the Shapella upgrade was successfully launched on the Goerli testnet, and ETH withdrawals from validator sets were successfully processed on all three testnets.
The Ethereum Shanghai upgrade is expected to bring significant benefits to liquid staking providers and solidify Ethereum's dominance in layer-1 protocols. The upgrade will allow users to withdraw staked Ether, improving liquidity and competition.
For traders and investors in ETH, the implementation of EIP-4895 could have certain impact on the price of the token.
According to data from Staking Rewards, 14.09% of all eligible ETH tokens have been staked, and when staking withdrawals are opened up, this could amount to significant liquidity flooding back into the open market, potentially putting downward pressure on ETH prices.
The implementation of EIP-4895 has the potential to affect the token's price. According to data from Staking Rewards 14.09% of all eligible ETH tokens have already been staked, and once staking withdrawals are allowed, significant liquidity could flood back into the open market, potentially driving down ETH prices. However, it is unlikely that all of the staked ETH tokens will be immediately sold off, making it difficult to predict the exact impact on prices. It is advisable for traders and investors to closely monitor the percentage of ETH coins staked.
Alternatively, the increased liquidity resulting from the upgrade could make ETH more attractive to users. Previously, those who did not wish to go through liquid staking protocols could now directly stake ETH with Ethereum.
Analysts predict that the Shanghai upgrade will likely have a positive impact on Ethereum's price. The upgrade is also seen as a bullish trigger that could help Ethereum target the $2,000 price point.
In the meantime, Ethereum has been trading in tandem with the general market, breaching the $1,700 resistance level and currently trading at $1,746 with weekly gains of over 20% as of the time of this writing. The regulatory impact on staking activities is also expected to have an impact on the value of Ethereum, along with the introduction of institutional investors on the platform, one of the Merge upgrades' long-term projected benefits.