Ethereum Shanghai upgrade pushed to April: Will there be too much selling pressure?

Ethereum Shanghai upgrade pushed to April: Will there be too much selling pressure?

Ethereum stakers have been eagerly awaiting the Shanghai upgrade, which will enable them to withdraw their staked ether. Stakers’ funds have been locked since Ethereum introduced the proof-of-stake Beacon Chain in December 2020. The upgrade was originally slated to take place sometime in March but was pushed by about two weeks to April during a recent execution layer meeting. The upgrade will occur approximately two weeks after the Goerli testnet launch on March 14. Goerli testnet permits developers to test the Shanghai upgrade before it launches on the mainnet.

While stakers are excited about the upcoming upgrade, the Ethereum Community is worried that massive withdrawals will take place, causing the price of ether to fall as ETH is dumped on the market with the hope of earning a profit. There’s about 17.5 million in staked ETH, worth an estimated $27 billion at the time of writing. Experts believe that these worries are misplaced because withdrawals will not occur at the same time since there’ll be a queue. Validators will have to meet certain requirements to withdraw fully or partially. For example, the validator node must be online and attest to blocks for a minimum of 256 epochs (4 epochs last about 24 minutes). Moreover, there can only be one full withdrawal in progress at a time. That means the impact of ETH withdrawals won’t be immediate.

Also, a report by CryptoQuant expects the selling pressure as a result of staking withdrawals to be moderate because approximately 60% of the stakers are in loss positions. Therefore, they’re unlikely to withdraw. Solo stakers, who have invested a lot to run their own nodes, are also unlikely to withdraw because they’re probably bullish on Ethereum. Additionally, experts reckon that as some stakers leave, new people will join Ethereum staking and the numbers may grow significantly in the next 18 months compared to what they are now. This is because the risk in staking will have declined once more, once withdrawals are activated.

NFTs are still making waves. And now Amazon is coming

NFTs are dead – long live NFTs. As it stands, the sales of these digital collectibles have seen some improvement again, rising beyond the $2 billion mark in February. This is the best performance since Terra’s crash in 2022. The surge is contributed to a controversial NFT marketplace called Blur.

The new platform surpassed the top NFT marketplace OpenSea in trading volumes and market share thanks to a financial incentive that rewards loyal users for trading high-value NFTs and for not trading on other platforms. The incentive program entails giving Blur tokens to users that have traded NFTs over the last three months through an airdrop. Traders have, therefore, been trading NFTs back and forth to increase their Blur token holdings, an activity that has contributed to the high trading volumes. 30-day trading volumes on Blur were $1.62 billion at the time of writing.

That aside, NFTs are yet again getting more support prominent support from the traditional system. It is Amazon that is entering the space, and its upcoming NFT platform indicates that NFTs are here to stay. The world’s biggest e-commerce company is projected to launch the platform on April 24th. However, it will only cater to US customers. The NFT platform will promote web3 adoption since it will open up NFTs to a wider market. NFTs on Amazon's digital marketplace will reportedly be tied to real-world assets (RWAs). That means users can purchase an NFT and have the attached real-world asset delivered to their doorstep.

In other NFT news, the company behind the most successful NFT collection (Bored Apes NFTs), Yuga Labs, has now ventured into Bitcoin ordinals. The new collection called TwelveFold consists of 300 images of hand-drawn art. Yuga Labs raised $16.5 million worth of Bitcoin through an auction that kicked off on March 5 and ended the next day. Only 288 bidders out of 3,246 were successful.

Despite holding a seemingly successful auction from a financial perspective, Yuga Labs was criticised for its stone age auction methodology. That’s because the auction required all bidders to send BTC to the company’s wallet. Those who didn’t win would then have to trust that the company would refund their BTC.

The stablecoin market records mixed performance

USD Coin (USDC) and Binance USD (BUSD) experienced an outflux in Feb amid the US regulatory crackdown. BUSD’s performance is still declining in March, while USDC has recovered this month. BUSD’s performance could be attributed to the fact that the issuer, Paxos, stopped minting the stablecoin following a direction from the New York Department of Financial Services. As a result, the stablecoin’s market cap has dropped from $16 billion to less than $9 billion, as of this writing.

On the other hand, Tether (USDT) has been enjoying a positive performance. Its market cap has surged by about $5.3 billion to over $71 billion at the time of writing. This is USDT's best performance in 15 months, leaving it the biggest stablecoin in the market.

While some stablecoins are suffering from the ongoing regulatory crackdown, experts think these digital fiat currencies on the blockchain could increasingly alleviate the crypto sector’s reliance on the TradFi institutions for on and off-ramps. Some researchers are also examining how stablecoins can be linked to the financing of the real economy. For instance, this research paper shows a relationship between stablecoins and commercial papers when the latter are used as reserve assets. A different research paper investigates the role stablecoins could play in machine-to-machine payments in the European economy. As these studies try to argue: Stablecoins may very well have a role to play in the future of finance.