Ethereum is about to go through one of its biggest upgrades since “The Merge,” the event that allows it to transition to a proof-of-stake consensus protocol. On April 12, 2023, the network will deploy the Shapella update at 22:27:35 UTC.
After its launch, Ethereum users would be able to withdraw their ETH stake from the “Beacon Chain”, the platform that initially supported the PoS migration. As a result, there is a lot of speculation about the potential impact on the market.
As of this writing, Ethereum is rallying and looks set to continue its uptrend beyond the $1,900 area and towards the $2,000 region. However, the last time the cryptocurrency underwent a major upgrade, it was followed by a market selloff and a fall into critical support zones.
Will Ethereum investors keep or dump their ETH?
according to a mail From crypto research firm CryptoQuant, the selling pressure of the Shapella update “will be less than expected.” The firm claims that most of the ETH staked on the Beacon Chain, around 9.7 million ETH, was locked in late 2020 and 2021.
Right now, Ethereum rallied from below $100 to an all-time high of $4,000. Therefore, these millions of ETH were staked at a loss and are unlikely to be thrown away after the upgrade.
Most of the investors with ETH staked on the Beacon Chain are large or institutional investors. In that regard, CryptoQuant analyzed Lido and similar platforms to gauge retail investor sentiment.
Like big investors, retail is keeping ETH staked at a loss, as seen in the chart below. The research firm noted:
Also, it is worth noting that a significant part of the deposits made by the Lido pool is currently under water. For the sole reason that the significant ETH staked is currently in losses, we believe that the selling pressure will be less than expected.
Analyzing the “smart money” and ETH options sector, crypto market analysis firm Blofin noted that the structure around these contracts remained unchanged to this day. As the upgrade approaches, there is a higher probability that ETH’s implied volatility will increase.
However, as of today, options investors were not “aggressively” betting on price fluctuation, suggesting that there are potentially no events for ETH after the Shapella update. blofin fixed:
Interestingly, the significant rise in ETH prices did not prompt aggressive investor bets on ETH performance expectations before and after the Shanghai update. There is only a week left before the update, but the ETH options IVs have not increased significantly, and the implied forward rate is still at a low level.
