What is Shapella?
The Shapella upgrade (aka the Shanghai upgrade) is where Ethereum’s transition to Proof of Stake completes.
The first step, aka The Merge was completed in September 2022 with holders depositing their ETH into the Beacon Chain for rewards.
However, stakers could not unstake their ETH…until now.
What’s the big deal?
A successful Shapella upgrade will allow stakers to finally withdraw their staked ETH. About 18 million ETH (or 15% of ETH in circulation) is said to become accessible.
There are two possible outcomes:
1) We could see a significant sell off as some holders trim their ETH holdings, or…
2) As staking becomes liquid, more ETH holders would start to stake their ETH on the Beacon chain, taking ETH out of circulation, bringing prices up.
So, will people start dumping ETH?
No one knows.
There could be a short term dumping as holders unlock their staked ETH and perhaps sell off their staking rewards.
You should note that accured staking rewards will only become eligible for withdrawal 5 days after Shapella upgrade. There could also be a queue for withdrawal, extending the dumping period.
So, when will the Shapella upgrade take place?
The Shapella upgrade has already successfully taken place at epoch 194,048, on 12 April.
As of this 730am (SGT), 13 April, withdrawals are live:
And, ETH price is down 0.76%:
Should you buy ETH?
That’s a loaded question.
We think the dip will likely continue in the short term as weak hands sell off their ETH, but price will start picking up thereafter as more holders start staking their ETH. As mentioned above, this would reduce the amount of ETH in circulation, driving up the prices. The upward movement could even extend further if more investors jump in on the price movement.
All in all, if you are optimistic about Ethereum’s long term growth, any short term dip in prices could offer an enticing entry point.
On the other hand, if you are no longer confident in the project, or wish to shift your capital elsewhere, you might want to make the move early.
Disclaimer: As always, do your own research. This article is just our opinion and do not be taken as financial advice.
If you’re not sure how to do your own research, Aik Keong (AK), our crypto trainer and mentor will give you the basics at the live Crypto 101 masterclass (limited runs, check here for next edition).
