Glassnode, the on-chain intelligence platform, predicts that just 170,000 Ether (ETH) will be unlocked within the first week of the Shanghai hard fork being executed on Ethereum. This figure is out of the total 18.1 million ETH that is staked on the Beacon Chain. The unlocked ETH comprises 100,000 Ether, worth $190 million, in staking rewards, and 70,000 ETH, worth $133 million, in staked Ether. Glassnode explains that only 253 depositors are waiting to exit their stake, and a few mechanisms are in place to prevent a flood of Ether supply from hitting the market all at once. The data shared by Glassnode found that only 22% of the 253 exiting depositors are currently in profit.
Glassnode expects a large amount of Ether to be withdrawn from the crypto exchange Kraken after the legality of its staking services was challenged by the United States Securities and Exchange Commission. According to Glassnode, it is unlikely that Kraken and Celsius, the crypto lending platform, will make these withdrawals as soon as Shanghai is activated.
The average deposit price across all staked ETH is $2,136, down 12.7% from Ether’s current price of $1,865, which equates to a net unrealized loss of $4.7 billion, according to Glassnode. After the peak unrealized loss of $16 billion in July 2022, the net unrealized loss now amounts to $4.7 billion. It is mainly carried by the whale-sized depositors, who hold a 76% share of the unrealized losses.
Fidelity Investments also shares the view that Shanghai won’t have much of an impact on ETH’s price action. It said in its April 5 report that “selling pressure will be muted due to the likelihood of partial withdrawals being re-staked as well as the length of time the withdrawals will take.”
The Shanghai hard fork upgrade is set to take effect on April 12, and it is by far the most anticipated one, as it will move Ethereum one step closer to a fully functional proof-of-stake system. Of the five EIPs that will be activated by Shanghai, Ethereum Improvement Proposal-4895 is the most awaited one. It will enable the unlocking of staked Ether and has the potential to bring about significant changes in the Ethereum network.
Glassnode expects a large amount of Ether to be withdrawn from Kraken and Celsius after the hard fork, while Fidelity Investments maintains that the selling pressure will be muted. Despite unlocking a significant amount of staked Ether, the impact on the price of ETH is expected to be mild, and the mechanisms in place will prevent a flood of Ether supply from hitting the market all at once. Additionally, the Shanghai hard fork will mark an important milestone in Ethereum’s journey to a fully functional proof-of-stake system, and it has the potential to bring significant changes to the Ethereum network.