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Ethereum Upgrade To Release $33 Billion In Cryptocurrency

Ethereum Upgrade To Release $33 Billion In Cryptocurrency
This week, investors will finally get access to more than $33 billion in ether thanks to a planned blockchain redesign.
Market participants will be able to redeem their "staked ether," or currency they have placed and locked up on the network during the past three years in exchange for interest, thanks to a new software upgrade to the Ethereum blockchain called Shapella.
Approximately 15% of all ether is staked, with a market value of $33.73 billion, according to statistics from Dune Analytics.
According to Sreejith Das, CEO of Attestant, a business that allows the staking of ether, up to 1.1 million ether will be available for withdrawals in the week following the redesign of the blockchain.
Based on the most recent price of roughly $1,860 for ether, that would be worth close to $2 billion.
Traders looking for a competitive edge are currently attempting to predict how the sudden ether windfall would affect prices. However, as Robert Quartly-Janeiro, chief strategy officer at cryptocurrency exchange Bitrue, noted, it's challenging to determine.
"The only thing certain is that the Shanghai hard fork will bring about some short-term volatility," he added.
Unlocking staked coins has some market participants concerned that it could trigger large withdrawals and a wave of selling, which could cause values to fall quickly.
Bundeep Rangar, CEO of blockchain investment company Fineqia International, claims that just roughly 29% of all ether staked by volume is currently profitable in dollar terms, indicating that the majority would be sold at a loss.
"It seems unlikely, therefore, that much of the staked ether will be sold," Rangar added.
For investors who chose to deposit ether in exchange for a dividend since the staking initiative started in 2020, Shapella would bring an end to a protracted wait.
The "Merge" upgrade, which replaced energy-intensive mining with a "proof-of-stake" system in which ether owners lock up 32 coins to verify new records on the blockchain and earn additional ether on top of their "staked" coins, paved the way for this development.
Before this week's planned change, investors who wanted to stake coins had to deposit a minimum of 32 ether at a time (worth $59,520 at the current exchange rate) for an unlimited amount of time, which is a substantial sum out of the price range of the typical retail investor.
"Before Shanghai, a lot of people and institutions probably chose not to stake their ether because, once they did, it would have been locked up for an undefined period of time, which was risky," said Dave Weisberger, CEO of digital assets trading platform CoinRoutes.
Investors might be more inclined to stake currencies after the upgrade as staked ether won't be locked up on the network.
According to CoinMarketCap, the market value of the tokens backing some of the biggest projects offering liquidity for crypto staking, including Lido Finance and Rocket Pool, has increased this year by nearly six times to $2 billion and four times to $875 million, respectively, on expectations of further growth.
"It is likely that in the long term the amount of ether staked will increase, especially in comparison with the percentage of supply staked for other digital assets such as Solana, Mathic and Ada," said Rangar at Fineqia.
What kind of investors are therefore likely to enter the market after Shapella's changes?
"It will be those institutions that have sat on the side lines, silently waiting for this final piece of the puzzle to be put in place, the ones that needed the ability to withdraw their ether before they were allowed to stake it," said Das at Attestant.

Christopher J. Mitchell

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