Butalik, the Russian brainchild behind Ethereum, is either about to see his creation boom or go completely bust. The NFT supporter is due for its next big upgrade, the “Shanghai Upgrade.”
Ethereum’s Shanghai Upgrade, also known as Shapella, is a hard fork set to launch this April 12th. This upgrade is expected to be a game changer for Ethereum, as it will allow holders to unstake their assets for the first time ever.
This means that holders will have full access to their holdings, which is a significant development for the blockchain. With over 500,000 validators on the Ethereum network, the development team will prioritize sharding, EVM, and EOF.
What is the Key Feature of the Upgrade?
The most important proposal, however, is the unstaking feature, which will be implemented on time. Now, whether there will be a huge exodus is another question we must wait and see.
Ethereum’s blockchain has reportedly seen a noteworthy surge in large trades over the last 2 weeks. The kind of trades that are usually associated with more market confidence (good thing, right?)
Additionally, recent data seemed to suggest that 40% of trades on the Ethereum network were ETH block trades. A classic case of buying the rumor and selling the news?
Well, major upgrades have historically attracted strong demand days ahead of the main event. The trades might be related to large trades executed towards the end of March.
Additionally, the data also highlighted that ETH’s demand currently outweighs sell pressure, as indicated by higher calls than puts. These observations seem to be in line with the bulls’ influence on the market.
And if we want to get technical, further investigation revealed that the confidence boost among ETH investors is not limited to block trades. In fact, Glassnode found that the retail segment is also responding positively to the Shanghai upgrade countdown. For instance, the number of addresses holding at least 0.01 ETH is now at a new ATH.
Can ETH Sustain its Bullish Demand?
Exchange outflows were slightly higher than inflows towards the start of April, but that quickly changed. As a result, the amount of ETH flowing into exchanges has been higher than outflows over the last few days.
While exchange flows may not necessarily paint a clear picture of what is happening in the market, a look at whale flows might be a better option.
This is because whales have more control over market direction. Interestingly, whale supply distribution revealed that whales holding over 1 million ETH in their addresses have been buying. This category collectively controlled roughly 24% of ETH’s circulating supply at press time.
On the other hand, whale categories holding between 10,000 and 1 million trimmed their balances over the last 24 hours.
These two categories collectively controlled 41% of ETH’s supply at press time. This explains why exchanges have been experiencing higher inflows than outflows.
Shanghai Upgrade’s Affect on Ethereum’s Price
Although the upcoming Ethereum upgrade and unlocks have raised concerns, the impact on price may not be significant. Despite the potential for a sell-off, the volume of ETH involved would be relatively small compared to the overall daily trading volume.
Additionally, many stakers may hold on to their positions rather than sell at a loss, reducing the sell-side pressure. Therefore, barring any major unforeseen events, we are likely to see regular price movement after the upgrade.
No major failures this Spring (thank goodness).
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