How Will the Shanghai Upgrade Affect Ethereum's Exchange Rate?

The Shanghai upgrade has been the most anticipated forthcoming event for the second largest cryptocurrency in the world since its switch to proof-of-stake with The Merge in September. The ability to withdraw staked Ethereum, which has long been inaccessible to ETH stakers, is the feature that users are most enthusiastic about. One of the most important forthcoming events for the whole crypto world, with more than $26 billion worth of ETH on the line. Let's look at it.

Shanghai's impact on Ethereum:

Liquid staking options have been available for over a year thanks to protocols like Lido Finance and StakeWise, which get around the need for 32 ETH to stake directly on the Ethereum network. These protocols will probably be disrupted if withdrawal is made possible. They will probably still be a helpful resource for people looking to generate passive income from their holdings, though. It's also possible that after the upgrade, Ethereum will become more centralised. Through decentralised staking pools like Lido, many stakers are expected to pay out their gains. If new investors choose to employ the services provided by centralised exchanges like Coinbase, these businesses would hold more validating authority.

Together with BTC, the price of ETH has stayed largely stable over the previous month despite having increased by around 36% since the year's beginning. Some believe that the widespread unstaking that will occur after the improvement could lead to a price increase. The second potential is that investors selling their accumulated ETH awards might cause the price of the cryptocurrency to decline. Increased ETH volumes should be anticipated after the update, regardless of the outcome.

When should the upgrade occur?

There hasn't been a firm date set for the upgrade yet, so that's uncertain. According to rumours, the Shanghai upgrade will happen sometime in March of this year. Yet it's possible that date will be postponed while Sepolia, the upgrade that comes before it, is fixed for faults. Depending of when it occurs, the potential removal of assets valued at billions of dollars will undoubtedly have an impact on the whole crypto industry.