Why ETH selling pressure is unlikely to increase after Shanghai upgrade: CryptoQuant
The profit and loss of staked Ethereum (ETH) indicates that there will be less selling pressure when the staked ETH tokens are unlocked in the Shanghai upgrade, crypto analytics platform CryptoQuant said. There have been concerns that the staked ETH unlock will result in these tokens flooding the market and creating high selling pressure.
But according to CryptoQuant analysis, 60% of staked ETH, representing 10.3 million ETH, is at a loss. Moreover, the depositors of the largest staking pool, Lido, are also at a loss. Lido holds nearly 30% of all staked ETH, with an average loss of around $1,000.
Selling pressure is generally high when investors have the potential to earn extremely high profits. Usually, when a large number of assets are unstaked at the same time, it is expected that some investors may want to cash in their profits and create selling pressure.
Since Ethereum investors do not have much profit potential, high selling pressure is not expected, as per CryptoQuant.
Low selling pressure also means that the price of Ethereum is unlikely to dip — token prices tumble low when selling pressure increases.
The Shanghai Upgrade
In early January, Ethereum developers agreed that the Shanghai upgrade would occur in March 2023. The only major code change in the Shanghai upgrade is unlocking ETH staked by validators.
Developers considered unstaking their highest priority and excluded a set of Ethereum Improvement Proposals (EIPs) dubbed EVM Object Format (EOF) in the Shanghai upgrade. The EOF, however, may be included in one of the future upgrades, but the developers are yet to take a final call.
The uncertainty regarding the unlocking period of staked ETH created much uneasiness among investors, who started questioning the future of the network. The start of withdrawals is expected to bring much-awaited relief to ETH validators.