- Ethereum price is trading below the important resistance at $2,000.
- The network will go through the biggest upgrade since the Merge.
- Experts from YouHolder and RockX provide their forecasts.
Ethereum price moved sideways on Monday as investors reacted to the upcoming Shanghai upgrade that is scheduled for this week. ETH price was trading at $1,854, which was slightly below the year-to-date high of $1,940. It has jumped by more than 56% from the lowest level this month, making it one of the best-performing coins in the industry.
What is the Shanghai upgrade?
As you recall, Ethereum went through a major transition in September 2022 when it moved from being a proof-of-work (PoW) to a proof-of-stake (PoS). PoS is a technology that uses delegators to confirm blocks.
As part of this transition, Ethereum opened its network to staking, which is a process where people delegate their tokens and earn returns. Data compiled by StakingRewards shows that ETH worth over $30 billion has been staked.
The upcoming Shapella upgrade will make it possible for users to withdraw their coins. As such, there is uncertainty about the implications of this move to the broad Ethereum ecosystem. For one, there are regulatory concerns since the transition means that Ethereum will have become a financial security. Gary Gensler has already cautioned about this transition.
In a statement, Ilya Volkov, the co-founder of YouHonder said that this move will actually be good for Ethereum since it will bring clarity to the industry. He said:
“I actually don’t think it’s as negative as other people are suggesting. If the U.S. SEC decides that PoS tokens are considered securities, this will bring some much-needed regulation and clarity to the industry. Furthermore, it will actually help the decentralization movement.”
Impact on Ethereum price
The consensus view among many investors is that Ethereum price will dip a bit after the merge happens this week as supply increases. Ilya believes that this dip will be temporary: He said:
“A plunge is likely to happen shortly after the completion of the upgrade, as a huge amount of ETH will be unlocked, and many people will also be selling their ETH. In the long term, as such an upgrade will positively impact the market and even the entire blockchain atmosphere, I believe ETH will rise again.”
He is not alone. In an emailed note, Chen Zhuling, the CEO of RockX, a global blockchain node operator, said:
“While some short-term market volatility is to be expected, the long-term benefits to the ecosystem are substantial, as Ethereum's capacity to handle more transactions per second increases, transaction costs decrease, and the security and efficiency of smart contracts improve. With the Shapella Upgrade, the liquid staking landscape will be transformed forever, and Ethereum will become the benchmark yield for crypto.”
Ethereum price has moved sideways towards the Shapella upgrade. It sits a few points below the important psychological level of $2,000 and the key point at $2,026, the highest point on August 14 last year.
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