It’s time for vigilance in the cryptocurrency market, as the million ether, so far blocked, is causing growing concern. On April 12, the Shanghai upgrade will allow users to recover their “staked ether”. This prospect of a sudden influx of ETH into the market raises questions. Will holders flock to exchanges to sell their tokens? Some analysts estimate that the resulting selling pressure could reach several billion dollars. A major challenge for the stability of the cryptocurrency market.
Shanghai, the long-awaited Ethereum upgrade
In a few days, April 12 at 23:27 UTC Specifically, the major Ethereum upgrade, dubbed Shanghai, is set to launch.
This step will mark the culmination of a multi-year transition to a consensus mechanism based on proof-of-stake. Since December 2020, network participants have filed more than $34 billion worth of ETH as part of this process.
Last September, Ethereum’s The Merge enabled the move to proof-of-stake. However, stakers have not yet been able to withdraw their deposited ETH or the rewards generated. Shanghai will finally give them that opportunity after more than two years of waiting.
Staked ETH and its rewards will be accessible via intermediaries on varying dates following the successful implementation of Shanghai, As recalled, Max Eberhardt, cryptocurrency analyst at Saxo Bank.
What impact on the cryptocurrency market?
According to analysts at K33 Research, around 1.3 million ETH could be put up for sale after the Shanghai upgrade. This is a potential pressure of $2.4 billion on the market.
Additionally, the liquidation of the 158,176 ETH balance by bankrupt lender Celsius could also add additional selling pressure.
The Kraken cryptocurrency exchange, recently in the spotlight, could also unlock all the ETH put into play by American investors. This is an amount of 1.2 million ETH.
However, it remains unlikely that these withdrawals will lead to massive sales. The increase in supply represents only 20% of the average daily Ether trading volume. In addition, the selling pressure should be spread over several days. This will allow buyers to match the selling pressure.
The Shanghai upgrade raises concerns about possible selling pressure. However, it should still take place without major disruptions in the cryptocurrency market.
In view of the current banking crisis, if investors decided to liquidate their assets, they would probably turn to bitcoin, the current safe haven. Investors would then avoid fiat money. Nevertheless, it is important to remain vigilant. Vitalik Buterin seems to have already found a solution to ensure the security of Ethereum.
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