Ethereum will conclude its two-year transition to proof of stake this week with the launch of the Shanghai upgrade on April 12. The move will introduce a number of technical improvements to the network, but most Ethereum traders only care about one thing: staking withdrawals.

With more than 18 million ETH—worth roughly $34 billion—locked up on the Ethereum network set to finally become available to validators, investors are understandably uneasy about what this might mean for the price of the second-largest cryptocurrency by market cap.

Andrew Thurman, a data analyst at Nansen, told Decrypt that in his view price impact in the short-term, however, will be “a little bit more muted” than community expectations suggest.

Also known by its consensus name Capella, Shanghai ends the two-year lockup period on staked ETH and its corresponding rewards. If all goes well, Ethereum stakers will be able to begin sending withdrawal requests to the network immediately after Shanghai goes live—but that doesn’t mean users will receive the funds on day one. Because of the anticipated length of the withdrawal queue, holders may have to wait weeks to months to retrieve their assets.

“With many speculating whether this event will cause a massive sell-off in price, it’s important to realize that the withdrawal queue only allows a limited set of requests per day (115,200),”  Guilhem Chaumont, CEO and co-founder of Flowdesk, said in a statement shared with Decrypt. “So while there may be sustained downward pressure on the price, unstaking is not likely to cause a sharp, sudden dip.” 

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Author: Tom Farren

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