Everything you need to know about Ethereum’s Shanghai hard fork

Ethereum’s highly anticipated Shanghai/Capella hard fork, scheduled for today, April 12, will enable withdrawals of staked ETH, raising concerns about potential sell-side pressure on the market. 

As of this writing, ETH price has already retraced nearly 2.5% in the last 24 hours, trading at $1,871 with a market cap of $225 billion.

With the release of staked ETH, the crypto community is eager to understand the potential market consequences and long-term ramifications. 

This in-depth analysis will examine crucial factors to provide a holistic understanding of the Shanghai upgrade’s effects on the Ethereum ecosystem.

ETH 24-hour price chart | Source: CoinMarkteCap

Historical context: learning from Ethereum’s past upgrades 

To assess the Shanghai upgrade’s potential impact, examining previous Ethereum hard forks is helpful. 

The August 2021 London hard fork and the subsequent EIP-1559 upgrade caused short-term price volatility, followed by long-term market stabilization. 

This historical context suggests that the Shanghai upgrade could follow a similar pattern, with market fluctuations giving way to a stable growth trajectory.


Stakers have been unable to access their staked ETH and rewards since November 2020, with some having accumulated rewards for over two years. 

The unlocking of approximately 17.1 million ETH, valued at $31.89 billion and comprising approx 15% of ETH’s total circulating supply, has raised concerns about potential market and supply impacts.

Staked ETH supply | Source: CryptoQuant
Staked ETH supply | Source: CryptoQuant

The staking landscape: cohorts and market influence 

Staking cohorts, composed of individual stakers, staking pools, and institutions, play a crucial role in determining the market’s response to the Shanghai upgrade. 

Individual stakers, as the name suggests, are private individuals who have chosen to stake their ETH holdings. The report estimates that individual stakers account for approximately 50% of the total staked ETH.

Staking pools are organizations that pool resources from multiple users to participate in Ethereum’s staking process. The report approximates that staking pools represent 30% of the total staked ETH.

Institutional stakers include financial institutions, funds, and businesses that have staked large amounts of ETH. Institutional stakers account for roughly 20% of the total staked ETH.

If most stakers view the upgrade as a positive development towards protocol development, this could significantly increase the value of Ethereum.

Liquidity concerns: assessing the potential sell-side pressure 

Even in the extreme case of the maximum withdrawal, the sell-side volume would fall within the average weekly exchange inflow volume. 

Celsius Network may also withdraw staked ETH as part of its bankruptcy process. Still, it’s unlikely to happen immediately after the upgrade. 

Lido holds over 30% of the network stake, followed by centralized exchanges like Coinbase, Kraken, and Binance. 

If a significant portion of stakers decides to sell their unlocked ETH, it could create sell-side pressure on Ethereum’s price. Still, it depends on market sentiment and the perception of the upgrade’s long-term benefits.

How will it impact the ethereum price?

A detailed analysis provides some insight into the potential scenarios. We can categorize the expected stake to be unlocked into three cases:

  • In the most extreme case, Glassnode expects a whopping 1.54 million ETH ($2.93B) to become liquid, with the total accumulated rewards and the permitted maximum amount of stake per week being withdrawn and sold.
  • With only 00×0 credentials receiving staking rewards and 45k ETH to be exited and sold, the current status quo would see around 312k ETH ($592 million) becoming liquid over the first week.
  • According to their best estimate, a total of 170k ETH ($323 million) will be sold. 

To gauge potential scale, we can compare these numbers to typical weekly exchange inflow volumes, with events like the FTX collapse providing a useful yardstick. 

Interestingly, even the most extreme case of 1.53 million ETH is still within the average weekly exchange inflow range. 

In other words, the average weekly exchange inflow would double in the most extreme case, falling into the scale of the recent market correction, with the price falling 8.7%. 

ETH weekly deposit vs staking unlock chart | Source: Glassnode
ETH weekly deposit vs staking unlock chart | Source: Glassnode

However, it would still be far below the scale of inflows during the FTX collapse, which saw prices fall 30.2%.

Therefore, the impact of the unlocking of staked ETH is unlikely to be as dire as some have feared. The report added that the Ethereum market seems poised to weather this storm.


The Ethereum Shanghai upgrade presents a multifaceted landscape of market factors, long-term implications, and potential consequences. 

From staking cohorts and network stability to investor sentiment and the broader cryptocurrency market, understanding these various aspects is essential to comprehending the upgrade’s impact on the Ethereum ecosystem. 

As Ethereum continues to evolve with additional upgrades and developments, the Shanghai hard fork will serve as a pivotal milestone, shaping its future trajectory and potential for growth.

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