Ethereum is preparing for its next major update, dubbed the Shanghai Upgrade, scheduled for April 12, and the upgrade is very important and users will be able to withdraw tens of billions of dollars from Ethereum deposits, a procedure that was not previously available globally.
Investment website Investopedia published a detailed report on the Shanghai upgrade, and writer Raul Nembimburath reported that users interested in becoming validators on the Ethereum network were receiving a certain amount of Ethereum as a kind of reward for depositing cryptocurrency to support the network and validate transactions. According to the announced figures, there are more than 17 million Ethereum units (worth about $ 36 billion at today's price) stored and their owners can only retrieve them after the next update.
Shanghai Ethereum upgrade explained
The Shanghai upgrade will introduce several improvements to the blockchain network, the most important of which are further fee reductions and faster and safer transactions.
Nembimborath confirmed that some analysts and traders have expressed serious concern that Ethereum may be under some short-term selling pressure following the announcement of the completion of a series of fundamental updates to the Ethereum blockchain.
He pointed out that the majority of analysts consider this development very positive for Ethereum blockchain in the long term, as the withdrawals of pledged coins should become more flexible, which will attract many Ethereum owners to mortgage their shares of it.
It's unclear how many users will want to withdraw money once their Ethereum is unblocked.
At least initially, demand for withdrawals is expected to outstrip Ethereum's new deposits. In the long term, an opportunity to withdraw pledged Ethereum coins is likely to make it more attractive because it will reduce risk for participants.
There is a general feeling among investors that even if Ethereum suffers some price declines following the recent update, many expect the negative impact to be short-term and unsustainable.
Impact on price
On the impact of the upcoming Shanghai upgrade on the price of Ethereum in particular and the prices of cryptocurrencies in general, Coindesk published a report by Christian Sandors that after Ethereum reached its highest price levels in just under 8 months last Wednesday around the $1950 area, the price of Ethereum witnessed a slight decline, as it was traded - at the time of writing the report - around the $1850 area.
The value of Ethereum holds positive potential in the medium to long term, but betting that the runner-up of the highest-ranking crypto in terms of total market capitalization returns to all-time highs this year is something else entirely.
This requires Ethereum's price to appreciate by 160% relative to current price levels, which is very difficult.
But at the same time, Ethereum prices have already risen by more than 100%, up from last year's lows of $800.
Ethereum reached a whopping 600% peak between November 2020 and April 2021.
In no case should Ethereum be ruled out for a 160% rise this year.