Ethereum is almost completing its process of transitioning to the full Proof of Stake mechanism. Its community chose this validation mechanism over Proof of Work because it is more energy efficient and faster in transaction speeds.

This upgrade will comprise two updates being uploaded and activated concurrently: the Shanghai upgrade and the Capella upgrade. They will go live on April 12, 2023, and allow validators to unstake their ETH tokens (stETH). It will also bring forth several new capabilities like increased transaction speeds, lower transaction fees, and reduced staking risks.

What to expect from the Ethereum network upgrade

Ethereum’s Shapella upgrade is expected to be bearish and bullish at different time frames. It will be bearish in the short term due to the unlocking of staked ETH, which may cause a sizeable selling pressure. 

Currently, over 30 million ETH worth $30B has been staked, about 15% of the current circulating supply. Around 3.3M ETh worth over $6.5B will be eligible for unstaking within the first eight weeks of the upgrade going live. As such, some market commentators expect around $2.5B of selling pressure to rock the ETH market.

If the selling pressure goes this high, the value of the ETH token will be negatively impacted on a short-term basis. However, if the network’s upgrade is successful and brings the intended efficiency, the ETH token may react positively in the mid to long-term timeframe and become bullish. 

Although ETH is a major cryptocurrency, it doesn’t necessarily translate that other cryptos will gravitate to its market direction after the upgrade goes live. Keep watching Fintech Express for updates on crypto and other fintech-related news and developments.

This article doesn’t in any way reflect the views of Fintech Express and is not financial advice. We are not liable for any losses caused by any information read from this or any other article that we publish. Do your own research and make decisions based on it. Thanks!