Upgrading from Ethereum Shanghai explained
#Upgrading #Ethereum #Shanghai #explained Welcome to InNewCL, here is the new story we have for you today:
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Most blockchain upgrades affect price action. The Ethereum Shanghai upgrade would be no different. Ether offerings on exchanges have already started falling as investors opt to move their assets into self-custody.
The previous Ethereum upgrade created good volatility in the market that traders took advantage of. ETH prices surged from around $1,000 in July 2022 to over $2,000 in August, reaching around $1,800 around the time of the merger. As exchange supplies of ether are rapidly declining, traders could see another price surge leading to the Shanghai upgrade.
However, short-term traders should note the drop in Ether price since the 2022 merger was pushed forward. This upgrade might not be all that different. The other factor to note is that Ethereum users who have not been able to withdraw their staked Ether for over two years will be able to access it immediately after the Shanghai upgrade.
With over 16.4 million ETH staked, if any of that hits the market, it could increase supply of ether and lower prices right after the Shanghai upgrade completes. This relationship between supply and demand is a fundamental principle of economics and a key factor in determining the price of assets, including cryptocurrencies, stocks, bonds, and commodities.
It is also worth noting that while there are downside risks to price action after the Shanghai update due to staking withdrawals, ETH withdrawals will only be available in small chunks. For example, traders looking to withdraw their Ether after upgrading can only do so gradually over time.
This could mitigate downside risks for Ether prices. But fear of increased supply is something that could weigh on market sentiment in the near-term.
