• Ethereum is set to undergo an upgrade, called Shanghai, on April 12th.
• The upgrade will unlock the ether (ETH) that has been staked since the “Merge” in September.
• This unlocking of ETH could lead to selling pressure and market participants should prepare accordingly.

Ethereum’s Upcoming Shanghai Upgrade

The Ethereum network is set to undergo its next upgrade, called Shanghai, on April 12, 2023. The Shanghai upgrade will unlock the ether (ETH) that has been staked since the “Merge,” a significant upgrade to its blockchain which switched from a proof-of-work (PoW) blockchain to a proof-of-stake (PoS) blockchain in September.

Benefits of Staking Ether

Individuals can now run validator nodes and stake their own ether in order to help secure the network in the absence of traditional mining infrastructure. Those staking are able to generate rewards paid in ETH from the network for their contributions. This no longer requires significant upfront investment into mining hardware and software as before.

Downside Of Staking Ether

The downside of staking Ethereum after the upgrade was that those staking were required to stake their ETH until the next upgrade – creating an illiquid amount of ETH unable to be traded on exchanges or used by holders until this upcoming unlocking event.

Potential Selling Pressure After Unlocking Event

When the Shanghai Upgrade is implemented, this will lead to potentially large amounts of ETH being unlocked simultaneously leading some market participants believing there may be selling pressure created by these unlocked tokens hitting exchanges at once. This potential increase in supply could have a negative impact on prices if enough sell orders are placed at once causing panic among other investors due to reduced liquidity.

How Advisors Can Prepare For Unlocking Event

Advisors should consider preparing for potential selling pressure caused by Ethereum’s upcoming unlock event and remain aware that prices may dip due to increased supply hitting exchanges at once leading investors into panic selling or closing positions altogether due cautionary sentiment being created by this event. Advisors should also continue researching further developments surrounding this unlocking event as more information becomes available closer to implementation date and adjust portfolios accordingly if necessary while continuing monitoring markets conditions around this time period carefully before any decisions are made with regards investing activities during this period

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