Glassnode Estimates $300M Ether May be Sold After Shanghai Upgrade

Join an hour long exploration of the advancements defining the Ethereum community in 2023.

While analysts from traditional banks remained mixed on the market impact of ether (ETH) after the much-awaited Shanghai upgrade later today, an on-chain report from Glassnode estimates at least $300 million worth of selling pressure.

“We estimate a total of 170K ETH intended to be sold after the Shanghai upgrade,” Glassnode said in a Tuesday report, citing on-chain data. “We project that only 100K ETH ($190M) of the total accumulated rewards will be withdrawn and sold.”

Glassnode said the estimate was made based on a “50% withdrawal credential update, our segmentation of depositors, and assumptions regarding investor conviction, and profitability” by using wallet behavior, period of staking and presence of liquid staking derivative products, such as Lido.

But bulls may have little reason to fear, as the selling pressure is likely to be absorbed quickly and have a smaller overall impact on ether prices.

“Even in the extreme case where the maximum amount of rewards and stake are withdrawn and sold, the sell-side volume still falls within the range of the average weekly exchange inflow volume. Therefore, we conclude that even the most extreme case will have an acceptable impact on the price of ETH,” Glassnode wrote.

Shappella – a portmanteau of Shanghai and Capella, two major Ethereum network upgrades that are expected to occur simultaneously on April 12 – will allow investors to withdraw their ether staked on the Ethereum blockchain. Staked ether cannot be withdrawn or freely traded currently.

Banks such as JPMorgan (JPM) say ether will likely face some selling pressure from the upgrade as more than one million ether staking rewards become instantly available this week.

If you add potential additional selling from staked ether balances that belong to “troubled entities,” then the selling pressure may be larger in the coming weeks, analysts led by Nikolaos Panigirtzoglou wrote, as CoinDesk reported. The bank says it expects ether to underperform bitcoin (BTC) over the next few weeks.

Meanwhile, Glassnode noted as many as 1,229 validators have already signed a voluntary exit message to signal their wish to unstake tokens after the Shapella upgrade.

DISCLOSURE