Why the Shanghai Upgrade Won’t Lead to an Ethereum Dump

The Ethereum community is buzzing with excitement as the Shanghai upgrade is set to begin unlocking 17 million ETH tokens from April 12, 2023, at 10.27 PM UTC. 

However, there have been concerns about a possible massive dump on the market due to this upgrade.

In this article, we’ll explore why the Shanghai upgrade probably won’t lead to an Ethereum dump and why buying Ethereum before the upgrade could present an opportunity.

Understanding the Shanghai Upgrade

The Shanghai upgrade is a major upgrade to the Ethereum blockchain that will allow investors to withdraw their staked rewards for the first time. After the upgrade, ETH tokens worth over $32 billion are expected to become tradable on the market. 

This has led to concerns that the influx of tokens could lead to a massive sell-off and a subsequent drop in the price of Ethereum.

However, it’s important to note that the unlocking process is dynamic and depends on the number of validators leaving the network. Exiting validators will undergo an exit queue and wait for either 27 hours or 36 days for the withdrawal to be finalized. This process is designed to disincentivize bad actors and prevent a sudden influx of tokens into the market.

A Comparatively Low Percentage of Ethereum Tokens are Currently Staked

One of the key reasons why the Shanghai upgrade is unlikely to lead to an Ethereum dump is the relatively low percentage of Ethereum tokens staked compared to other proof-of-stake (PoS) cryptocurrencies. 

For instance, Cardano has 71% of its tokens staked, Solana has 70%, Binance Coin has 85%, and Polkadot has 50%, whereas only 16% of Ethereum’s tokens are staked.

This means that a significant portion of Ethereum tokens are not locked up in staking contracts and are readily available for trading on the market. While some investors may choose to sell their tokens after the upgrade, the low percentage of tokens staked means that the impact on the market is likely to be limited.

Tweet from Altcoin Daily illustrating the high proportions of staked crypto in proof-of-stake chains.

Long-Term Benefits of the Shanghai Upgrade

While there may be short-term volatility in the price of Ethereum after the Shanghai upgrade, the long-term benefits of the upgrade are favorable for the crypto market. The ability to withdraw staked rewards will make Ethereum more attractive to investors, leading to increased adoption and demand for the cryptocurrency.

Additionally, the Shanghai upgrade is expected to bring significant improvements to the Ethereum network, including increased scalability, faster transaction speeds, and lower gas fees. These improvements will make Ethereum more competitive and increase its appeal to developers and businesses.

Buying Ethereum Before the Shanghai Upgrade

Given the long-term benefits of the Shanghai upgrade and the low likelihood of a massive dump on the market, buying Ethereum before the upgrade presents an opportunity for investors. As more investors become aware of the upgrade and its potential benefits, demand for Ethereum is likely to increase, leading to a rise in its price.

Furthermore, the low percentage of Ethereum tokens staked means that there is currently ample supply available for trading on the market. This, coupled with the expected improvements to the Ethereum network, makes buying Ethereum before the Shanghai upgrade sound like a smart investment decision.

Ultimately, there seems to be little doubt that the Shanghai upgrade is unlikely to lead to an Ethereum dump, and buying Ethereum before the upgrade presents an opportunity for investors. 

The dynamic unlocking process, low percentage of Ethereum tokens staked, and long-term benefits of the upgrade make Ethereum an attractive investment option. 

As always, it’s important to conduct thorough research and exercise caution before making any investment decisions. But for those looking to buy Ethereum, now may be an opportune time to do so.

This article does not constitute financial advice. You should be sure to do your research and consult a professional financial advisor before making a major investment decision.

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