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Ethereum (ETH) has been making headlines lately with its upcoming Shanghai upgrade, which promises to bring significant improvements to the network. One of the most anticipated changes is the ability to withdraw staked ETH, which has been a long-standing concern for many users and validators.
Now that the upgrade which will allow for the withdrawal of staked ETH is set to happen later today (April 12), a report from the market intelligence platform IntotheBlock shows only 0.6% of validators are interested in withdrawing their staked ETH.
According to the report, out of the 562,717 Ethereum validators, only a total of 3,614 opted for withdrawal as of April 10. While this figure is significantly lower than the total validators on the Ethereum network, the chart shows it could still impact the Ethereum price.
Run Down On Shanghai Upgrade
The Ethereum Shanghai upgrade, also known as Shapella, is a result of the network’s staking system which involves validators locking up a certain amount of ETH in order to participate in the consensus process and validate transactions on the Ethereum network.
Related Reading: Ethereum Staking Deposit Plummets As Shanghai Upgrade Draws Near, Here’s Why
In return for their efforts, validators are rewarded with additional ETH. However, until now, staked ETH has been locked up and unable to be withdrawn from the network, meaning that users who wanted to participate in staking had to make a long-term commitment to their investment.
The ability to withdraw staked ETH has been a much-requested feature for some time, and the upcoming Shanghai upgrade is set to finally make it a reality. With the Shanghai upgrade set to take place later today, users will now be able to withdraw their staked ETH, which is a significant development for the Ethereum 2.0 project.
Shanghai Launch Impact On Ethereum Price?
So far, there is no accurate answer to how the Ethereum price could react following the Shanghai launch as there are many factors at play in the cryptocurrency market. However, from a technical perspective, ETH could record a notable movement.
Related Reading: Why Is Ethereum (ETH) Still Trading Below $2,000?
In the 1-day time frame, ETH price recently tapped into one of its major highs which indicates the asset might see a retracement. This means Ethereum could see a dip as the Shanghai upgrade commences showing the sell-off of validators that have since been eager to withdraw and take profit.
It is worth noting that the retracement or plummet from ETH might not last long as only a small amount of validators are looking to withdraw. In addition, on the price chart, ETH still has an external high just above the $2,000 region.
Before Ethereum could see a notable fall after the Shanghai launch, the asset must have climbed above the external high above the $2,000 zone. This is because traders triggering ubiquitous take profit orders on asset charts cause a plummet after external liquidity has been taken.
Overall, assuming a large number of users suddenly decide to withdraw their staked ETH at the same time, it could lead to a temporary oversupply of ETH on the market, which could put downward pressure on the price.
On the positive side, it is reasonable to assume that the ability to withdraw staked ETH could result in more users wanting to participate in staking to earn rewards for their efforts. This could increase the demand for ETH to stake in the first place and reduce the overall supply of ETH over time.
Featured image from Shutterstock, Chart from TradingView.com
