Holders of ether, the native token of the $231 billion ethereum blockchain, began withdrawing their cryptocurrency after the so-called Shanghai upgrade was completed in Asia early Thursday morning, but ether prices were steady, analysts said, with the amount withdrawn In line with expectations.
The key feature of the upgrade is the ability for users known as validators to withdraw their staked ether, or tokens deposited to support the operations of the world's second largest ethereum blockchain, in exchange for passive income, usually in the form of More tokens. As of noon Hong Kong time, more than 53,320 ether ($102 million) had been withdrawn, with another 5,584,420 held by 268,820 validators awaiting withdrawal, according to Token Unlocks. The data tracker estimates that withdrawals could reach 105,680 Ether over the next 12 hours. Approximately 3,000 Ether is staked in the upgraded network.
Ether was changing hands at $1,916 midday in Hong Kong on Thursday, up 2.5 percent over the past 24 hours, according to CoinMarketCap data. The cryptocurrency is up about 60% so far this year. Jonathon Miller, managing director of cryptocurrency exchange Kraken Australia, told Forkast in an emailed comment: “The amount of withdrawals we are seeing is what we [and the community] expected as these stakeholders are committed their funds without a specific withdrawal schedule," said Thursday. Expect some big moves and volatility, he said.
Those sentiments were echoed by Charlie McGlynn, head of decentralized finance trading at Taipei-based fiat-to-crypto exchange XREX. “All things considered, there was far less of a massive and hasty exit than many had speculated,” he told Forkast on Thursday. “This is a strong de-risking event, as users can now stake and unstake with confidence,” McGlynn said. “Expect an increase in new staked deposits in the coming days and weeks.” With roughly 18 million ether (worth about $34.5 billion, or about 15% of the total supply) on the network, according to Etherscan, fears are starting to emerge that holders may rush to sell ether to lock in profits, pushing low price. Users may have withdrawn 1.2 million ether within five days of the upgrade, according to Coin Metrics estimates cited in a Bloomberg report Tuesday.
However, Guilhem Chaumont, CEO of crypto-financial service Flowdesk, pointed out that daily system limits on how much collateralized Ether can be withdrawn itself prevent token dumps. According to the Ethereum Foundation, only 115,200 withdrawals can be processed per day.
“It is important to realize that the withdrawal queue only allows a limited set of requests per day, so while there may be sustained downward pressure on the price, unstaking is unlikely to cause a sharp, sudden drop,” he commented in an email said earlier this week. Ken Timsit, head of Cronos Labs, an accelerator for the Cronos chain that connects ethereum and the Cosmos blockchain, warned that ethereum holders will monitor withdrawals after the upgrade in Shanghai is complete and may be subject to withdrawals if demand is high. Overreact.
