The Ethereum blockchain is due to undergo its Shanghai upgrade, also known as “Shapella”, shortly. This backward-incompatible hard fork will open the possibility of $30 billion worth of ether being unlocked, leading to two differing views from crypto analysts. Henry Elder, head of decentralized finance at Wave Digital Assets, expects the anticipated selling pressure to cause a market sell-off, while Laurent Kssis, a trading adviser at CEC Capital, believes prices may dip upon successful completion of the upgrade.

The selling pressure is likely to be created via the partial withdrawal of one million ETH earned as rewards for staking, and Sean Farrell of FundStrat believes this has already been factored in to the market. The Ether-Bitcoin ratio has dropped 13.6% since the start of 2021, as Bitcoin continues to soar with its 70% gain this year.

Galaxy Digital have addressed the bearish perspective, saying that 553,650 ETH may be sold, with this split over seven days. This would equate to around 1% of the ETH/USD’s daily volume, which would be comparatively insignificant. The firm does acknowledge however that this may depend heavily on the risk environment and liquidity.

Whether the Shanghai upgrade is a ‘sell the news’ event or an opportunity for the market to ‘buy the news’, past performance suggests that the Ether-Bitcoin ratio could move in either direction. It’s perhaps best to keep track of the current market and risk environment when deciding how to capitalize on the upgrade.



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