Here Is What Institutions Are Saying About Ethereum's Shanghai Upgrade

The upgrade, scheduled for later Wednesday, will enable validators to withdraw staked ether.

AccessTimeIconApr 12, 2023 at 9:58 a.m. UTC
Updated Apr 12, 2023 at 2:51 p.m. UTC

Analysts differ on the amount of ether (ETH) selling pressure that could result from the Ethereum blockchain’s Shanghai upgrade, scheduled for later Wednesday. The Shanghai upgrade (aka Shapella), will enable validators to withdraw staked ether and rewards that have been locked up.

JPMorgan (JPM) says ether will likely face some selling pressure from the upgrade as more than one million ether staking rewards become instantly available this week.

If you add potential additional selling from staked ether balances that belong to “troubled entities,” then the selling pressure may be larger in the coming weeks, analysts led by Nikolaos Panigirtzoglou wrote.

The bank says it expects ether to underperform bitcoin (BTC) over the next few weeks.

Bank of America (BAC), meanwhile, doesn’t expect the Shanghai liquidity event to directly drive ether selling pressure, but it does expect increased volatility around the event due to lower liquidity, exchange inflows, derivatives activity and price action related to the previous upgrade, the Merge.

Coinbase (COIN) says that a sell-off in ether on the back of this event should be relatively limited.

Selling directly from this source may amount to only about 1% to 2% of total average daily ether trading volumes, and Coinbase says its biased towards the lower end of that range.

ETH performance around the Shanghai Fork will be less dependent on technicals and more contingent on what “risk” is doing at the time. If the market sees risk assets selling off, investors may decide to unstake and sell ether just to de-risk, while institutions may not step in as aggressively on the buy side, analysts David Duong and Brian Cubellis wrote.

At the time of publication ether was trading 2.5% lower at around $1870.

Edited by Oliver Knight.


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Will Canny is CoinDesk's finance reporter.