As the launch of the Ethereum Shanghai Upgrade approaches, investors are starting to get more nervous because they are not sure if the upgrade could result in a positive or negative move for Ethereum. On February 22, Nansen, an on-chain based analytics platform revealed Some key factors Ethereum investors need to be aware of before the Shanghai upgrade begins.
These key factors were released in a series of tweets on Twitter and included key points such as the total amount of ETH deposited and top takers, prices across top ETH deposits, and selling pressure on ETH from non-stakeholders. after the release of the Shanghai update.
The Shanghai Update, also known as ‘Shapella’, is a hard fork for the Ethereum network that is scheduled to launch on February 28, 2023. After Ethereum transitioned to a proof-of-stake mechanism last September, the validators became an important part of the ecosystem.
A total of 32 ETH is required to be a validator on the Ethereum network. However, with platforms like Lido, investors could stake less than 32 ETH and still be a validator on the network. The Shanghai update will allow the withdrawal of staked ETH from the Ethereum Beacon chain.
Illiquid participants to determine selling pressure
According to data from Nansen, the Ethereum blockchain currently has a total of 16.8 million ETH deposited on the network. Of the total amount, the liquid participation platform, Lido Finance represents 29.5% of the figure, while other platforms such as Coinbase, Kraken, and Binance make up just 26% combined.
Nansen noted that Lido has a large amount of total staked ETH, has a crucial role to play, and therefore needs to be decentralized enough to protect the ecosystem from any centralized censorship wrath.
Furthermore, while the consequences of the Shanghai launch may be uncertain, Nansen suggested that the price ranges of when major ETH deposits occurred are crucial for the occurrence of mass withdrawals, as they will determine the profit margin of depositors when implement the Shanghai update.
Nansen’s on-chain data shows that average deposit prices for ETH are around $600, resulting in an initial deposit spike, followed by steady deposits up to the $3,400 price level.
Revealing the notable details, Nansen mentioned that illiquid participants in the Ethereum network are likely to sell their holdings when withdrawals begin after the Shanghai update, thus significantly influencing the Ethereum market. This category of participants is responsible for 24.5% of all ETH staked, which amounts to approximately 4.1 million ETH, which is equivalent to $6.9 billion.
ETH Price Action Ahead of Shanghai Launch
Over the past 24 hours, ETH has moved in a 1.8% uptrend after a slight pullback since yesterday. Furthermore, ETH has been in an uptrend since the beginning of the year along with other altcoins on the market.
The cryptocurrency has rallied significantly by more than 40%, moving from a range of $1,100 late last year to trading above $1,600 as of today. However, despite the continued uptrend, ETH is still 65% below its all-time high of $4,878 seen in November 2021.
Unsplash Featured Image, TradingView Chart
