Glassnode, a very well-renowned crypto analytical platform has predicted in a recent report that only an estimated 170,000 Ether (ETH) of the total of over 18.1 million ETH tokens staked on the proof-of-stake (PoS) Beacon Chain will be unlocked within the first week of the Ethereum Shanghai Hard Fork being executed on the mainnet.
The sum highlighted in the report, totaling about 170,000 ETH comprises about 100,000 ETH (worth over $190 million) in earned staking rewards and the balance of 70,000 ETH of actual staked ETH (worth about $133 million), Glassnode said in its report on April 11, 2023.
Additional read: The 'Ethereum Shanghai Upgrade' is Coming
Glassnode expanded upon its prediction, explaining that only 253 depositors are currently waiting to exit their stake and that a few mechanisms are in place to prevent a sudden deluge of ETH tokens supply from hitting the market all at once.
These 253 depositors hold about 1299 validators on the Beacon chain, while another 214 slashed validators will be forced out as soon as the Shanghai upgrade goes live on the Ethereum mainnet. Thus, Glassnode in its prediction mentions that it is confident the hard fork will not have any "dramatic" impact on ETH prices.
“Even in the extreme case where the maximum amount of rewards and stake are withdrawn and sold, the sell-side volume still falls within the range of the average weekly exchange inflow volume....Therefore, we conclude that even the most extreme case will have an acceptable impact on the price of ETH."
Additionally, thanks to the bear market of 2022, only 22% of the 253 existing deposits are in profit, while the rest are seeing notional losses on their books.
However, as the weeks roll on after the successful hard fork, Glassnode expects a number of other large institutions to begin selling their staked ETH to recover funds. For example, once popular crypto lending platform, Celsius - might need to unstake a large amount of its staked ETH tokens to sell them off and recover funds as a part of its bankruptcy proceedings.
Glassnode also mentioned in its report that the average deposit price of ETH across all staked ETH on the Beacon Chain is $2136, which is down nearly 13% from Ethereum's current price of $1870, as of writing. This equates to a net unrealized loss of about $4.7 billion. In the report it said,
“After the peak unrealized loss of $16B in July 2022, the net unrealized loss now amounts to $4.7B. It is mainly carried by the Whale sized depositors, who hold a 76% share of the unrealized losses.”
According to the article by CoinTelegraph, global financial firm Fidelity Investments is also of the view that the Shanghai upgrade, and the unlocking of staked ETH won't have too much of an impact on ETH's price. In its April 5 report, it said,
"Selling pressure will be muted due to the likelihood of partial withdrawals being re-staked as well as the length of time the withdrawals will take.”
The Shanghai Upgrade is all set to take effect today April 12, at 10:27 pm UTC. The unlocking of staked ETH from the Beacon Chain will be enabled by Ethereum Improvement Proposal, EIP-4895.
Out of the five EIPs that are set to go live through the Shanghai-Capella hard fork, EIP-4895 is by far one of the most highly anticipated ones as it completes Ethereum's transition to a fully functional proof-of-stake (PoS) network.