Investing.com – Unlike the , which has been showing an uncertain trend, the rose last week, hitting a new yearly high near $1,940. However, this outperformance of ETH compared to BTC is largely explained by the anticipation of a major technical event for the network of the second largest cryptocurrency.
Indeed, the Shanghai (or Shapella) hark fork will be implemented this week, Wednesday, April 12, and experts are quite divided regarding the short-term impact on ETH price.
What is the Ethereum Shanghai Update?
This important update, which will complete the transition of Ethereum to a Proof of Stake system, aims to allow the withdrawal of staked ETH. Remember that the “Merge” update of Ethereum, which took place in September 2022, abolished ETH mining, to introduce staking.
Staking consists of “blocking” cryptocurrency on the network in order to become a “validator”, and to receive income in exchange. Thus, the validators receive a kind of passive income on their ETH blocked in staking to participate in securing the network.
However, it was until now impossible to withdraw staked ETH and associated winnings. The Shanghai update therefore comes to remedy the situation, and will allow the withdrawal of staked ETH.
However, some analysts fear that this “release” of staked ETH will lead to massive sales on the cryptocurrency, from investors who have been blocked for several months and who wish to cash in their profits, especially since Ethereum has recently made significant progress. .
What impact can be expected on the price of Ethereum?
Therefore, it is not excluded that Ethereum suffers the blow following the update, at least in the short term. On the other hand, in the longer term, there is a consensus that the Shanghai hard fork will be positive for the demand for Ethereum, and therefore its price.
Indeed, the fact that staked ETH will become “liquid”, that is to say unblockable, could encourage many investors to participate in ETH staking. Indeed, it was not very engaging until now to participate in staking, without knowing when the blocked funds will be released.
This is particularly the case for institutional investors, who will therefore now be more inclined to participate in Ethereum staking, knowing that they will be able to dispose of their staked ETH as they see fit following Shanghai.
However, a rush to ETH staking would have a double bullish impact on the price of Ethereum. Indeed, not only would demand increase, as investors would have to buy Ethereum before they could stake, but supply would also decrease, with staked ETH being “taken out of circulation”.