After the Shanghai upgrade of the Ethereum blockchain was completed on Thursday morning in Asia, Ether holders withdrew their cryptocurrency. However, the price of Ether remained stable and analysts deemed the withdrawn amounts to be as anticipated. Ether is the native token of the Ethereum blockchain, which has a value of $231 billion.
The primary aspect of the upgrade allows validators, who are users supporting the operations of the second-largest Ethereum blockchain by depositing tokens, to retrieve their staked Ether. They receive a passive income, typically in the form of additional tokens, in exchange for their support.
Token Unlocks reported that by noon in Hong Kong, more than 53,320 Ether (valued at $102 million) had been withdrawn, while 268,820 validators held another 558,4420 Ether awaiting withdrawal. The tracker predicts that the total amount withdrawn may reach 105,680 Ether within the next 12 hours. After the upgrade, approximately 3,000 Ether were staked in the network.
As per CoinMarketCap data, the value of Ether was US$1,916 around noon on Thursday in Hong Kong, indicating a 2.5% increase over the past 24 hours. The cryptocurrency has witnessed a rise of approximately 60% this year.
In an email comment to Forkast on Thursday, Jonathon Miller, the managing director of cryptocurrency exchange Kraken Australia, stated that the withdrawal amount was anticipated as the stakes had invested their funds without any specific timeline for withdrawal. He further added that some volatility and significant movements were expected in this regard.
On Thursday, Charlie McGlynn, who is the head of decentralized finance trading at XREX, a fiat-crypto exchange based in Taipei, shared similar thoughts. He informed Forkast that there was no significant rush observed for exiting, contrary to what many had anticipated.
“This is a strong derisking event as users can now feel at ease to stake and unstake,” McGlynn said. “New staking deposits can be expected to increase in the coming days and weeks.”
Questions arose when Ether holders staked nearly 18 million coins – roughly equivalent to 34.5 billion USD – into the network; making up a substantial 15% of its total supply, as reported by Etherscan. To prevent prices from dropping, Coin Metrics estimates that 1.2 million Ether must be withdrawn within a 5-day span following the upgrade, based on an article published Tuesday by Bloomberg.
In contrast, Guilhem Chaumont, CEO of crypto-financial service Flowdesk, emphasizes that the daily limits on withdrawing staked Ether could stop any potential sell-off from occurring. Indeed, the Ethereum Foundation has determined that only 115,200 withdrawals can be processed on a daily basis. Thus, it might prevent a spike in sales or liquidation.
“It’s important to realize that the withdrawal queue only allows a limited set of requests per day, so while there may be sustained downward pressure on the price, unstacking is not likely to cause a sharp, sudden dip,”
As the Shanghai upgrade is due to be completed soon, caution has been issued by Cronos Labs’ leader, Mr. Timsit. It appears that Ether stakes will be closely monitoring withdrawals from Ethereum and Cosmos blockchains once the upgrade is finished, and there could be potential over-reaction in the event of a high volume of cash-out requests.
In an emailed comment earlier this week, Timsit suggested that the expected upgrade of Ether may not have a major impact on the market in the long term. This is because much of its value has already been taken into account and short-term volatility should eventually even out.
