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The crypto community has continued to fret over the likelihood of Ethereum validators mass-dumping their Ether as the Shanghai upgrade approaches.
The Shanghai upgrade, expected to roll out later this month or early April, will signify Ethereum’s transition to a full-fledged proof-of-stake system. It will also allow validators to withdraw their staked ether and rewards gained by staking their Ether on the beacon chain.
To date, the Ethereum PoS smart contract has attracted about 530,600 validators who have staked more than 17.4 million Ether since it was created in 2020, according to Etherscan data. This total staked Ether represents around 13% of the total supply of ETH and cannot be withdrawn until the Shanghai Fork upgrade takes place.
Experts have thus been keeping a close eye on whether investors will dump or hold this massive stash when it is unlocked, as it could be a make-or-break moment for Ether’s price.
Ether Dump Unlikely Post-Shanghai, Cryptoquant
According to onchain analytics firm Cryptoquant, the upcoming upgrade will unlikely trigger selling pressure for ETH. In a March 2 post, the firm noted that most stakers might be unwilling to sell given that their holdings are already at a loss.
 
 
“There would be low selling pressure for ETH from staking withdrawals after the Shanghai upgrade,” the firm wrote. To support its claim, the firm noted that “the majority of the ETH staked (60% or 10.3 million) is currently at a loss and that the average depositor of the largest staking pools is also currently at a loss.”
As per the firm, profitable staked ETH was staked less than a year ago and has not seen significant profit-taking events in the past. “Typically, selling pressure arises when participants have extreme profits, which is not the case for staked ETH currently,” the firm added.
Additionally, the discouragement to sell can also be inferred from the liquid staking protocol Lido Finance which currently holds almost 30% of all staked ether at an average loss of nearly $1000.
Lido provides a liquid staking solution for Ether, issuing staked Ether (stETH) when users deposit Ether. This gives users staking rewards for each day the tokens are held in their wallets. Last week, the protocol was forced to introduce a “Staking Rate Limit” after registering its largest daily stake inflow of over 150,000 ETH, showing further that Ether holders are unwilling to sell.
From an on-chain viewpoint, Ether prices will also appear less likely to experience a severe drop considering the continued drop in ETH supplies on exchanges. Recent data from Glassnode shows that the total percentage of ETH inflows across exchanges dropped 11% from around 30% last September. Theoretically, this could make the selling pressure less intense.
At press time, ETH was trading at $1,644, down 0.70% in the past 24 hours, according to CoinMarketCap.
