Ethereum Price Prediction After the Shanghai Upgrade

The crypto market has been enjoying a bullish mood in the past few weeks, and there are several reasons to be excited about for crypto investors. Apart from the market sentiment, ETH traders have plenty of exciting developments to look forward to soon — most notably, the upcoming Ethereum Shanghai upgrade.

The next critical stage in what was formerly known as Ethereum 2.0 is the most significant development after The Merge in September 2022. The Merge transitioned the Ethereum mainnet from a Proof-of-Work (PoW) consensus to a Proof-of-Stake (PoS) model.

The ETH Shanghai update, scheduled for April 12, 2023, is an exciting milestone in the Ethereum roadmap. It will enable validators who have staked ETH on the Beacon Chain and then the Ethereum mainnet to unlock and withdraw their tokens and rewards.

Staking ETH went live on the Beacon Chain in December 2020. Since then, over 550,000 users have staked more than 17.8 million ETH tokens on the network. Since the beginning, all the ETH tokens staked have remained locked in smart contracts since this function rolled out more than two years ago. The Merge transformed the Ethereum mainnet from PoW to PoS and brought staking to the Ethereum mainnet.

Total Staked Ether | Source: Beaconcha.in

Learn more about the Ethereum Shanghai upgrade in our previous blog post within this series.

The ETH Shanghai/Capella upgrade (also referred to as “Shapella” upgrade by some) will allow users who have staked their ETH directly on the network, via liquid staking protocols and CEXs like KuCoin, access to their locked tokens and rewards, starting April 12, 2023. This move will unlock high levels of liquidity, potentially flooding the crypto market with millions of formerly inaccessible ETH tokens.

Following the approval of Ethereum Improvement Proposal 4895 (EIP-4895), the hard fork will let validators and stakers withdraw their staked ETH from the Beacon Chain. This ETH, locked up for over two years, can be withdrawn to users’ crypto wallets, traded on exchanges, and used for other purposes.

However, to avoid too much liquidity flooding the network and to streamline the process, the developers will offer a single queue to process partial and full withdrawals on the Ethereum network. Validators can withdraw only their staking rewards or the 32 ETH they staked to become validators, resulting in their complete exit from the Beacon Chain.

Impact on KuCoin Users Who Have Staked ETH

Following the Shanghai Upgrade, which introduces unstaking to the market, KuCoin Earn will launch the ETH staking withdrawal function seven days after the Ethereum Shanghai/Capella upgrades. Users can then redeem their ETH on the ETH 2.0 Staking page post-upgrade.

The upcoming upgrade has created considerable interest in trading and holding ETH among crypto investors, just like at the time of The Merge. The weeks leading up to The Merge had seen the ETH experience high volatility, giving crypto traders ample opportunities to trade the developments and generate profits.

Ethereum Price History, Circa The Merge

The Ethereum price had shot up from around $1,000 in July 2022 to beyond $2,000 in August 2022, settling close to the $1,800 level by September 2022 when The Merge went live. Similarly, the upcoming Shanghai + Capella upgrade could increase the appeal of ETH staking, especially for retail investors with smaller holdings via staking protocols and exchanges. This could drive significant volatility in the Ethereum supply and price in the coming weeks, leading up to the rollout of this upgrade and shortly after that.

Ethereum Projection Following Shanghai Update

Unlocking staked ETH could drive high liquidity and increase the ETH supply in the market after the Shanghai upgrade. This move could potentially decrease the ETH price, at least in the short-term, immediately following the upgrade’s rollout — however, not everyone shares this opinion.

As time passes, market stabilizes, and the enthusiasm surrounding the withdrawal eases, there could be a higher interest in holding and staking the ETH token among investors. Such a move could see the liquidity tighten in the market again, making staking Ethereum more attractive and accessible, especially among retail investors.

The increased interest in staking ETH could see more DeFi protocols and exchanges offer lucrative rewards to stakers. This could result in more ETH tokens getting locked in the Ethereum mainnet in the future, while the higher demand for ETH tokens in the market could support the Ether price.

The crypto market sentiment has been mostly positive in recent weeks. The Crypto Fear & Greed Index holds at 63 at the time of writing and has stayed over the 50 mark, indicating optimism among crypto investors since the past month. The positive sentiment in the crypto market is expected to be further bolstered by the optimism surrounding the upcoming Shanghai/Capella update.

Can the Shanghai Update Drive More Interest in ETH Staking?

Ethereum staking is expected to trend in the coming weeks, leading to and following the upgrade. This could spike interest in certain critical sectors of the crypto market, especially decentralized finance (DeFi).

The uptick in investor interest surrounding ETH staking could also drive up on-chain activity on CEXs, DEXs, and other DeFi projects that support staking Ether. This, in turn, could increase the value of their native tokens in the market, keeping them trading bullish. KuCoin is one of the most convenient platforms to stake ETH, withdraw your staked ETH tokens to trade them, and do more with your holdings.

Another key group of tokens that could perform well in the coming weeks, thanks to the Ethereum Shanghai upgrade, is that of liquid staking protocols. Liquid staking derivatives (LSDs) platforms such as Lido Finance, Rocket Pool, and Frax could also enjoy considerable attention from investors and see the value of their tokens rising.

These tokens have experienced high volatility in recent weeks, and this trend could continue at least for a short term following the upgrade. Please note that this is not investment advice, and that investors must take time to conduct their own research before exploring trading opportunities in the digital asset market.

Shanghai Update Could Boost Trading Activity in the Crypto Market Too

After unlocking the staked Ether tokens in a few weeks, the crypto market could see higher trading activity. This could boost the value of native tokens of CEXs and DEXs, such as KuCoin’s KCS, so keep an eye out for them if you’re looking for good trading opportunities.

Beyond trading Ethereum, crypto enthusiasts can also trade Shanghai-Upgrade tokens on the KuCoin Spot Market, if they wish to trade this development in the crypto market. We recommend you do your own research (DYOR) and exercise caution when placing any trades in the cryptocurrency market.

Ether has outperformed the majority of the market in the past week by gaining close to 5% in the past 7 days. Its price climbed to a fresh eight-month high, passing the $1,900 level and approaching the $2,000 mark.

ETH/USDT moved to a high of $1,921 on April 5 right after making a low of $1,855. As a result of this rally, the second-largest cryptocurrency by market cap went back to its strongest point since August 17, when its price hit a peak of $1,957.

Analysts believe that, due to a strong push from yesterday, some bulls moved to take profits, which led to ETH falling from the day’s high to the current price of $1,882.

ETH/USDT Chart on the Hourly Timeframe, KuCoin

While many believe that the Shanghai upgrade is likely to cause a price drop, fundamentals suggest that Ethereum’s percentage of total supply is much lower compared to its competitors, indicating that we may not see a significant price drop. In fact, numerous analysts are calling for a push past the $2,000 mark before the upgrade lands on the mainnet.

On the other hand, ETH technicals are showing that a reversal may be at play, with the daily RSI hovering near the overbought zone.

When looking at the upside, we can see strong resistance at the $2,300 level, as well as a strong support level at $1,800. The market is currently very divided, and predicting the direction of the move could prove extremely difficult.

Ethereum’s upcoming Shanghai upgrade is certainly (at least partly) responsible for the increase in trading activity and interest in ETH. While some believe that the increase in circulating tokens will flood the market and cause a price decrease, others believe that there’s nothing to worry about and that ETH will remain strong, and even push past the $2,000 mark in the short term.

If we put the bull and bear cases for Ether’s price movements aside, it’s clear that the second-largest cryptocurrency is developing and moving towards its ultimate goal — maintaining its place as the dominant blockchain for creating dApps, as well as becoming faster, cheaper, more secure, and more accessible to new and existing users.

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