How will the Shanghai upgrade impact ETH price? Expert explains

While it may have some short-term negative impact on the price of ETH, the upcoming Shanghai upgrade will be extremely bullish for Ethereum, as it will attract more capital to staking and increase the network’s security, according to Ethereum researcher Vivek Raman. 

The Shanghai Upgrade, scheduled for April 12, will allow network validators to withdraw funds that have been locked to secure the network since December 2020. The upgrade will complete the network’s transition to a proof-of-stake system which started last October with the Merge upgrade.

Around 18 million ETH will be available for withdrawal following Shanghai. That could put some selling pressure on ETH’s price in the short term, acknowledges Raman.

However, in the long run, the ability to unstake Ether will “de-risk the ETH investment in a tremendous way,” he pointed out. In particular, institutional investors that couldn’t get involved earlier in staking will feel more comfortable once ETH can be unstaked. More capital entering ETH staking will improve the Ethereum network in the long run.

“The more native proof-of-stake asset that’s staked, the higher the cost to attack the chain,” Raman pointed out.

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