Shanghai Upgrade To Mitigate Ethereum Selling Pressure

  1. 60% of staked ETH is currently at a loss, representing 10.3 million ETH.
  2. Lido holds almost 30% of all staked ETH at an average loss of nearly $1,000.
  3. Ethereum has added an “account abstraction” feature through a smart contract.

According to a recent analysis, there is reason to believe that Ethereum (ETH) selling pressure will remain low following the Shanghai Fork upgrade. This is based on examining the profit and loss of staked ETH, which revealed two key factors.

First, 60% of staked ETH is currently at a loss, representing a substantial amount of 10.3 million ETH. Second, the largest staking pool, Lido, holds almost 30% of all staked ETH at an average loss of nearly $1,000, with an average loss of 24% across staked ETH.

Approximately 13% of the total supply of ETH has been staked, meaning it can only be withdrawn in March 2023, when the Shanghai Fork upgrade takes place. As a result, concerns have arisen that when staked ETH can be withdrawn, it may flood the market and create significant selling pressure. However, due to the aforementioned factors, there needs to be more indication that this will be the case.

Typically, selling pressure arises when participants have extreme profits, which is not currently valid for staked ETH. Furthermore, the most profitable ETH was staked less than a year ago and has yet to see significant profit-taking events in the past.

It is worth noting that the 7 EMA Exchange Whale Ratio for Bitcoin (BTC) reached its highest level just before the FTX collapse period. While this does not necessarily indicate that selling will occur in the market, it does suggest that selling pressure derived from inflows to exchanges has significantly increased. 

In a companion piece, Coindesk disclosed that a smart contract named EntryPoint, implemented using the new ERC-4337 standard, has brought “account abstraction” to the Ethereum network. This will make it less difficult for customers to recover their cryptocurrencies after losing their private keys to their digital wallets.

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Kelvin enjoys writing about cryptocurrency and blockchain. He started blogging in 2019 and switched to cryptocurrency in 2020. Kelvin is interested in technology, football, chess, and Defi. He wants decentralization to benefit everyone on the planet.