Main navigation

Ethereum (ETH): Are There Reasons to Worry About Altcoin's Next Update?

Wed, 12/21/2022 - 01:30
article image
Sabrina Martins Vieira
Should Ethereum's Shanghai hard fork really concern you?
Ethereum (ETH): Are There Reasons to Worry About Altcoin's Next Update?
Cover image via U.Today

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Read U.TODAY on
Google News

Soon after the arrival of the Merge, the cryptocurrency market is looking forward to the Shanghai update of Ethereum (ETH). But could any problems occur with this next hard fork?

Shanghai will bring fragmentation to increase network speed and reduce transfer rates. The Ethereum Virtual Machine (EVM) may also be impacted. After all, five proposed changes have been made to the EVM.

If developments go well, Shanghai is likely to hit the main altcoin network in March 2023.

The massive sale that should occur with this update is the great fear of the crypto community, as this upgrade will bring liquidity to ETH; therefore, the cryptocurrency units that are staking on Beacon Chain will be released for trading.

But why were they locked up?

Beacon Chain was developed to make a safe change from Ethereum's consensus model to proof of stake (PoS). This way, users who trust the potential of the leading altcoin could start staking ETH.

Crypto depositors validated blocks that had no transactions to help the network see if the PoS process was proceeding the way it should. Thus, with the arrival of the Merge, Ethereum would have a secure network for common users and projects that use its blockchain.

With Ethereum locked, even with the arrival of the Merge, developers would have the predictability of network security without a sudden variation in activity occurring on the ETH blockchain.

Will massive Ethereum sale happen?

First, it is worth mentioning that there may indeed be selling pressure on Ethereum. Even if investors who trust the smart contract platform decide to keep their ETH in storage, short-term investors may not be so confident.

As such, investors may panic, believing that the unlocking of Ethereum from the staking contract would be a catalyst for selling.

When Beacon Chain launched in early December 2020, ETH was exchanging hands at $610. At the time of writing, the altcoin is trading at $1,187.

Although this is a 94% increase, many of Ethereum's depositors on Beacon Chain saw the altcoin grow to $4,891.

With the fundamentals of crypto getting stronger and the arrival of Ethereum 2.0 closer, the chances of it getting back to that level are high. Therefore, long-term investors should not make massive sales.

If a situation occurs where sales are made and the price of Ethereum falls, the altcoin becomes more attractive for staking. Rewards will increase, and the entry price to earn income from holding the altcoin will be lower, encouraging more investors to join the proof-of-stake network.

Another excellent incentive for this circumstance is that the Ethereum stake, after Shanghai, will no longer be locked. In this way, those who deposit from March 2023 onward will be able to withdraw their assets whenever they want, bringing more traction and taking more ETH units from cryptocurrency exchanges.

article image
About the author

Sabrina has been creating content for the cryptocurrency market since 2018. Her career includes work for important news portals in Brazil, such as Cryptonizando and Guia do Bitcoin.
In addition, she is a partner of the portal and YouTube channel É Top Saber.
Her passion for blockchain news and education led her to create the news portal Bolhacrypto.
In order to help companies and projects in the cryptocurrency market to develop, Sabrina has been leading Varandacrypto, a company that offers content for blockchain projects.