Around 5:00 a.m. on April 13, 2023, “Shanghai Upgrade” will occur, which is the most watched event by Ethereum people right now. The upgrade enables the “withdrawal of ETH tokens on Ethereum’s Beacon Chain” function, which currently has over 18 million ETH in existence, making many people wonder what the massive amount of ETH that will be available for withdrawal will be. Positive or negative factors on price!?
For investors unfamiliar with the crypto world In December 2020, Ethereum created a new blockchain called “Beacon Chain” to test the system. Proof-of-Stake which is a form of consensus that uses self-money as collateral instead of Proof-of-Work that uses the processing power of the computer that consumes electrical energy At that time, ETH owners might set up a “Validator Node” to receive transaction recording fees. But the limitation is that if you want to withdraw the ETH coin, you will have to wait for a future upgrade, which is the Shanghai (Shapella) Upgrade, which will arrive in the early hours of April 13.
Currently, the 18 million (approximately) ETH on the Beacon Chain represents 15% of the total amount of ETH that can be traded. It is natural for many to worry that the $34.2 billion worth of ETH will sell into the market leading to a “panic sell”.
Peerapat Hankongkaew, Chief Investment Officer (CIO) of Cryptomind Advisory Co., Ltd., commented that the Shanghai Upgrade would only be negative for ETH prices in the short term. We know that at least 2.5 million ETH or 13% of ETH on the Beacon Chain will be withdrawn immediately following the upgrade is complete. which we will know clearly when the upgrade is completed
However, in practice, ETH will not be issued in large amounts immediately on the first day, but there will be a withdrawal process system that will be gradually withdrawn. We estimate that there will be no more than 300,000 ETH gradually. Unlocked during the first 5 days and following that there will be regarding 61,000 ETH ETH gradually unlocked for a period of regarding 2 months.
For a long-term view, we see Shanghai Upgrade as a positive factor with several factors, including:
- Investors become even more Validator Node with the ability to withdraw.
- The staking ratio is still low compared to other blockchains.
- Income from a Validator Node offers a high return compared to a low risk.
- In the future, additional revenue will be earned as a Validator Service for other platforms.
- Allows the next upgrade to continue.
- ETH withdrawn may be reinvested in Liquid Staking, a facilitating service. Conveniently being an Ethereum Validator Node
In summary, we view Ethereum’s Shanghai upgrade this time as another big positive development following The Merge that took place in September last year if ETH prices tumble during that period and economic numbers like CPI. The US that came out on the night of April 12 came out not wrong from what analysts expected. It is a good time to accumulate more ETH from the panic of the market. The support-resistance framework that is viewed in Technical Analysis is that the day bar should not be closed below 1,730 USD and the resistance at 2,030 to 3,000 USD during this period. 3 months
