According to Ethereum researcher Vivek Raman, the upcoming Shanghai upgrade could have some negative impact on ETH in the short term; however, it will be highly bullish for Ethereum’s native token in the medium and long terms as it can attract more capital to staking and strengthen the security of the network.
The Shanghai upgrade, scheduled for April 12, will allow network validators to withdraw Ether that has been locked to secure the network since December 2020. This upgrade will also complete the network’s transition to proof-of-stake (PoS) that began in October 2022 with The Merge upgrade.
Approximately 18 million ETH will be available for withdrawal after Shanghai. According to Raman, a large amount of Ether unlocked can create a selling pressure on Ether, thereby causing the price of the second largest coin in the market to drop in a short time.
However, in the long run, unstaking Ether will de-risk the ETH investment in a tremendous way. In particular, institutional investors who can’t participate in staking early will feel more comfortable when ETH can be unstaked. More investors staking ETH will improve the Ethereum network in the long run as well as increase the security of the network. “The more native proof-of-stake assets that’s staked, the higher the cost to attack the chain”, said Raman.
Due to the positive news from the upcoming upgrade, earlier this month, Ether surpassed the $1,900 mark – the highest level in the past 7 months. At the time of writing, ETH is trading at $1,860, up slightly over the past 24 hours.