Bernstein Sees 'Cautious' Ether Price Until Shanghai Upgrade

The firm noted that investors are worried about a "supply overhang."

AccessTimeIconMar 1, 2023 at 12:14 p.m. UTC
Updated Apr 9, 2024 at 11:30 p.m. UTC

Ether’s (ETH) price action is expected to be “cautious” until the Ethereum blockchain’s Shanghai upgrade, due later this month, as the market is concerned about a supply overhang, Bernstein said in a research report Wednesday.

The Shanghai fork will allow ether that has been staked and is now locked to be withdrawn for the first time.

Bernstein’s analysis shows the supply increases are likely to be spread over a few weeks, even months, resulting in little selling pressure on a daily basis. The brokerage firm sees a limited impact on the supply of ether, but noted that weak sentiment due to "unstaking" could put pressure on ether's price before the upgrade..

On the positive side, the market expects the removal of a lock-in to lead to more people staking their ETH, which will give investors confidence with unstaking.

“The availability of and wide adoption of existing pooled staking tokens that have held their peg well negates the case for a significant increase in staking immediately after the Shanghai upgrade,” analysts Gautam Chhugani and Manas Agrawal wrote.

The “Shanghai upgrade may attract some additional staking from institutional investors (who may not want to stake through liquid staking platforms),” they added.

Bernstein said the “steady-state staking penetration” for Ethereum will gradually increase and the Shanghai upgrade is a step in that direction.


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Will Canny is CoinDesk's finance reporter.