Speculation on $ETH Price Action

Tonight marks the biggest on-chain event of the year in crypto, as Ethereum is set to implement the Shapella (Shanghai + Capella) upgrade which will allow for ETH coins to be withdrawn from staking positions.

The upgrade is expected to take place at about 10:30 p.m. UTC on April 12. Following the completion of the upgrade, users will be able to immediately withdraw rewards earned from staking ETH, as well as their staked principal of 32 $ETH, although that queue is expected to take weeks to process.

You can join the Shapella Watch Party on YouTube, where more than 160 viewers had already joined, 10.5 hours before the event.

The general consensus is that Shapella, like The Merge, is a significant upgrade to Ethereum that makes it more attractive to stakers, and in the longer term makes it more competitive against the legions of newer blockchains that have launched since Ethereum was created. The additional flexibility is also expected to drive more value to liquid staking platforms such as Lido, Rocket Pool and Frax, whose governance tokens have outperformed the general market since January in the runup to Shapella.

However, analysts are split over the short-term price action of $ETH due to Shapella.

Will the upgrade cause a dump in price as speculators “sell the news” and $ETH stakers exit their positions and cash in their coins?

Or will a successful upgrade generate immediate buys of $ETH as investors who have already de-risked their positions rush in to take advantage of the new staking flexibility?

Then again, will the price action be muted or neutral, as $ETH stakers choose to shift their positions to liquid staking platforms rather than sell, or investors in general adopt a wait-and-see approach?

Data points to consider include:

• There are 563,000 active validators on Ethereum’s Beacon Chain (according to a Metrika dashboard supported by the Ethereum Foundation).
• There are 19.3 million total locked ETH coins (current value $36 billion), or 16% of the total supply.
• Less than half of $ETH stakers are in profit since they locked their positions (according to a Dune dashboard by hildobby.

According to CoinGecko, the price of $ETH has dropped 2% in the past 24 hours, compared to $BTC holding steady. Liquid staking tokens had also dropped, including $LDO (8%), $RPL (9%) and $FXS (4%).

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What is Ethereum:

Ethereum is an open-source, distributed computing platform based on blockchain technology that can execute smart contracts - that is, the terms written in the contract will be executed transparently, automatically when the previous conditions are satisfied, and no one can interfere. At the same time, Ethereum also allows developers to build decentralized applications (DApps) and decentralized autonomous organizations (DAO).

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