Glassnode predicts that $300 million worth of selling pressure may occur after the much-awaited Shanghai upgrade on the Ethereum network today, April 12.
After the upgrade, investors will be able to withdraw their staked ether on the Ethereum blockchain. Glassnode’s estimate of $300 million selling pressure is based on a “50% withdrawal credential update, our segmentation of depositors, and assumptions regarding investor conviction and profitability.”
However, the report also suggests that the selling pressure is likely to be absorbed quickly and will have a smaller overall impact on the price of ether. In an extreme case scenario, the selling pressure will still be within the range of the average weekly exchange inflow volume.
“We estimate a total of 170K ETH intended to be sold after the Shanghai upgrade,” Glassnode said in a Tuesday report, citing on-chain data. “We project that only 100K ETH ($190M) of the total accumulated rewards will be withdrawn and sold.”
Glassnode’s report suggests the selling pressure caused by the Shanghai token unlocks will only have a minor short-term impact on the price of ETH.
“Even in the extreme case where the maximum amount of rewards and stake are withdrawn and sold, the sell-side volume still falls within the range of the average weekly exchange inflow volume,” the report added. “Therefore, we conclude that even the most extreme case will have an acceptable impact on the price of ETH.”
JP Morgan predicts that Ethereum will face selling pressure as over one million ether staking rewards become instantly available this week. Additionally, the bank says that the selling pressure may be larger in the coming weeks as there may be potential additional selling from staked ether balances that belong to “troubled entities”.
However, the bank still expects ether to underperform bitcoin over the next few weeks.
Overall, the simultaneous network upgrades will have a significant impact on the fundamentals of Ethereum, and analysts and investors will be closely watching how the market responds in the coming weeks.