To everyone that has been staking their ETH after the merge “This is The Moment You’ve All Been Waiting for!”
The Shapella Upgrade is here, April 12th, 18 million staked ETH equating to around $33 billion will be available for unlock.
Much of the consensus is that this upgrade will lead to mass withdrawals of ETH and selling pressure as people who have been staking ETH for over 2 years now are able to finally sell. However, this might not be the case.
There are often 2 kinds of events from a trading standpoint, a buy the news event and a sell the news event. The first being you want to hold before the news hits because it will lead to a price jump and the second being you want to buy during the hype leading up to the event and then sell just before it takes place.
The ETH merge was a sell the news event, everyone was hyped up about the merge and ETH was pumping, outperforming Bitcoin by a significant margin in July and August of 2022, followed by a pretty big move to the downside.
Often the contrarian bet is the way to go, which is why the Ethereum Shapella upgrade might not be as terrible as many are making it sound.
ETH has been trading down relative to Bitcoin ever since the Merge, part of this is likely due to investors going more risk-off in Q4 of 2022, but we suspect that the bearish pressure in the first quarter of 2023 is investors feeling uncertain about the implications of a massive ETH unlock.
Long-term, the upgrade should actually be bullish for ETH, Here are a couple of reasons why:
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ETH is now a cash-flowing asset that has a Risk Free Rate, meaning investors can now get paid to hold it regardless of if the price goes up or down, like a bond or dividend stock, this makes increases the value of holding.
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Investors will now be able to stake ETH while maintaining liquidity, because they will be able to unlock their ETH, this will make staking ETH even more attractive.
Both of these should be tailwinds for ETH in the long run, many other Proof of Stake layer 1s have 50%+ staking participation rates while Ethereum’s is below 15%, this means if Ethereum follows suit, the outlook is very positive for the network.