The Shanghai Upgrade for Ethereum is just around the corner, and the crypto community is buzzing with excitement!
With the new upgrade,
Ethereum stakers can finally withdraw their staked ETH for the first time since the launch of the PoS Beacon Chain.
So, the big question on everyone's mind is, "How much money could you make?"
Well, get ready to find out!
In this edition of our newsletter, we'll break down the numbers and give you a realistic idea of the potential profits you could earn from the Shanghai Upgrade.
From conservative estimates to bullish predictions, we've got it all.
So, please grab a cup of coffee, sit back, and dive into Ethereum and the Shanghai Upgrade!
Shanghai: The Finishing Touch of “The Merge”
If you're a crypto enthusiast, you've probably heard of the ongoing transition of Ethereum from proof-of-work (PoW) to proof-of-stake (PoS). This transition has been marked by two main events so far:
December 2020: The launch of the PoS Beacon Chain and ETH staking.
September 2022: ”The Merge” of the legacy PoW Chain with the PoS Beacon Chain.
But wait, there's more!
Now we have the third event in this trilogy, the Shanghai Upgrade, which is scheduled for April 12th.
It's like the final piece of the puzzle, the cherry on top of the cake, the last episode of your favourite TV series.
Shanghai: A Minor Technical Upgrade with Major Implications
So, what's the big deal with Shanghai?
Well, for starters, it will enable Ethereum stakers to withdraw their staked ETH for the first time since the launch of the PoS Beacon Chain.
That's right, you can finally get your ETH back from that long-term investment you made back in December 2020.
It's like finding a forgotten wallet with a bunch of money inside.
But before you get too excited, let's talk about the numbers.
Currently, there's around $33 billion worth of staked ETH (17.6M ETH) that could theoretically be withdrawn and sold post-Shanghai.
That's a lot of money! But don't worry, the chances of a massive sell-off are slim to none.
Why?
Well, think about it this way: if you own a beach house that generates steady rental income, would you sell it just because you finally have the option to do so?
Of course not! You know it's a valuable asset that will continue to appreciate in value over time.
The same logic applies to staked ETH deposits. People will most likely withdraw their staked ETH rewards but keep their staked ETH deposits for the long term.
Quantifying The Market Impact of Shanghai
Now, let's talk numbers again.
How much staked ETH could realistically be withdrawn and sold post-Shanghai?
Under conservative assumptions (50% to 70% of rewards are withdrawn and sold, 0.0% to 7.5% of deposits are withdrawn and sold),
Shanghai could induce around $130M to $500M of daily ETH sales in the week after the upgrade.
But don't panic!
These numbers might seem big, but they're not significant when you compare them to the daily spot volume of ETH.
On a YTD basis, daily ETH spot volume has averaged $10.8B.
Shanghai-induced sales of $130M to $500M would represent only 1.2% to 4.5% of daily spot volume. So, it's not the end of the world, folks!
That's it for today, folks!
We hope you enjoyed learning about the Shanghai Upgrade for Ethereum and how much money you could potentially make.
Whether you're a seasoned crypto investor or just getting started, it's always important to stay informed and up-to-date on the latest developments in the crypto world.
So, until next time,
keep hodling, and stay curious.
Zain from Team Inspired Analyst
-Signing off!
Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.