According to market watchers, Ethereum could see a $2.4 billion drop in value after the Shanghai upgrade
The 1 million ether that can be withdrawn instantaneously has become a market concern.
In eight days, when Ethereum undergoes the backward-incompatible Shapella hard split or Shanghai update, users will be able to extract their “staked ether.”
The persistent concern in the market is that the imminent unleashing of ETH deposited in the network to increase security in exchange for rewards will cause some token holders to race to exchanges to sell their tokens.
Some observers estimate that the consequent increase in selling pressure could be worth several billion dollars.
These two figures represent approximately 1.3 million ETH or $2.4 billion in prospective sell-side pressure on the market, K33 Research analysts said in a note to clients on Tuesday.
Since the Beacon Chain’s launch in December 2020, more than 18 million ether have been staked on the network.
While the entire balance cannot be unstaked immediately following the upgrade, approximately 1,1,000,000 coins earned as rewards for staking can be withdrawn immediately. Ether stakers are rewarded with Ether.
The insolvent cryptocurrency lender Celsius may liquidate its staking balance of 158,176 ETH to recover at least a portion of creditors’ funds, thereby adding to the selling pressure.
According to K33, Kraken, the San Francisco-based cryptocurrency exchange that recently came under regulatory scrutiny for failing to register the offer and sale of its crypto-asset staking-as-a-service program in the U.S., is likely to unstake all ETH staked by U.S. investors. At the time of publication, there were 1,200,000 ETH staked via Kraken.
According to CoinGecko data, the anticipated supply increase of more than $2 billion represents just 20% of Ether’s average daily transaction volume.
Also Read: Elon Musk is accused of putting Dogecoins to pay off Twitter’s debt