The Ethereum network has been buzzing with excitement as the much-awaited Shanghai upgrade approaches, with the possibility of unlocking staked ETH tokens. While many investors are apprehensive about the potential flood of unlocked tokens, crypto analytics platform CryptoQuant has said that there is little reason to worry about increased selling pressure.
According to CryptoQuant’s analysis, 60% of all staked ETH tokens, or 10.3 million ETH, are at a loss. As a result, there is less opportunity for high profits, meaning that the unlocked tokens will not increase selling pressure.
Usually, when a large number of assets are unstaked at the same time, it is expected that some investors may want to cash in their profits and create selling pressure. However, since Ethereum investors do not have much profit potential, high selling pressure is not expected, as per CryptoQuant.
The low selling pressure also indicates that the price of Ethereum is unlikely to dip. Usually, token prices tumble low when selling pressure increases, but the situation is different for Ethereum as the low selling pressure means that the price will remain stable.
Additionally, CryptoQuant’s analysis shows that depositors of the largest staking pool, Lido, are also at a loss. Lido holds nearly 30% of all staked ETH, with an average loss of around $1,000. This further supports the claim that there will be less selling pressure when the staked ETH tokens are unlocked in the Shanghai upgrade.
The Shanghai upgrade, which is scheduled for March 2023, will unlock ETH staked by validators. The only major code change in the upgrade is related to this unlocking of ETH tokens. Developers considered unstaking their highest priority and excluded a set of Ethereum Improvement Proposals (EIPs) dubbed EVM Object Format (EOF) in the Shanghai upgrade.
While the uncertainty regarding the unlocking period of staked ETH created much uneasiness among investors, the start of withdrawals is expected to bring much-awaited relief to ETH validators.
In conclusion, CryptoQuant’s analysis suggests that ETH unlocked tokens are unlikely to cause significant selling pressure. This news should provide some relief to Ethereum investors as they look forward to the upcoming Shanghai upgrade.
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