The much-awaited Ethereum Shanghai upgrade, also known as the Shanghai-Capella hard fork, is scheduled for Wednesday. Following this, users will have access to the $31 billion worth of ether that has been placed in the blockchain since December 2020.
This year, the metric has increased by 15%. Between 19% and 20% is where Ether’s dominance rate has remained constant. Comparatively, in the weeks leading up to September’s crucial upgrade called the Merge, the percentage increased from 14% to 21%.
“The Shanghai upgrade will unlock over 18 million ether staked since late 2020. The market is worried that the unlocking may bring about a sell-off, causing uncertainty in the market,”
Even though the upgrade will make over 18 million ETH available for withdrawal, only 1.1 million ETH, the coins acquired as staking incentives, will be available immediately.
In a note released on Friday, IntoTheBlock’s head of research, Lucas Outumuro, stated.
“If all partial withdrawals are attempted just after the Shapella fork (which seems highly improbable), it would take around four and a half days for these ETH profits to enter the market,”
Full withdrawals that include the majority of the ETH staked will take longer, according to Outumuro.
“It would take approximately 100 days for one-third of validators to exit if they all attempt to exit simultaneously, translating into $80-$100M worth of ETH being withdrawn per day. This would make up about 1% of ETH’s daily trading volume, though it is unlikely that all withdrawals will be sold,”
However, the market is not persuaded, as shown by Ether’s poor performance in comparison to Bitcoin and the fact that put options, or negative wagers, are more expensive than call options. Investors are likely also suffering from regulatory worries.
The United States Securities and Exchange Commission claimed in February that centralized exchanges’ Ethereum staking services amounted to the sale of unregistered securities in the country.
In last, recent U.S. banking sector turbulence and the ensuing dramatic pricing of interest-rate predictions lower globally have been to Bitcoin’s advantage. During banking crises, Bitcoin has historically attracted refuge bids and has developed over the past 3-years into a macro asset.