Analysts Split on Market Direction After Hard Fork
Ethereum’s “Shapella” upgrade is set to unlock $30 billion worth of ether locked in the network since 2020. While some market observers anticipate an ether price plunge as users liquidate their holdings, others believe that the expected uptick in selling pressure is already factored in, and the market will rebound in a “buy the news” move.
Henry Elder, head of decentralized finance at Wave Digital Assets, sees the upgrade as a clear “sell the news” event for ether and governance tokens of liquid staking solutions like Lido, which have rallied since January. Elder predicts that the withdrawal queue will fill up immediately, resulting in the fulfillment of the “supply deluge” narrative and likely triggering a sell-off.
Disputing Views on Post-Upgrade Selling Pressure
Laurent Kssis, a crypto trading adviser at CEC Capital, believes that ether’s rally ahead of the Shanghai event could lead to pressure once the upgrade is successfully implemented. Kssis predicts that traders who bought the news in advance will dump their ETH on the market following the event, leading to an oversupply of ether flooding the market.
Sean Farrell, head of digital asset strategy at FundStrat, however, has a more optimistic outlook. Farrell believes that the market is overly pessimistic about the supply-side effects of upcoming staking withdrawals. He expects an ether-bitcoin [ETH/BTC] rally in the weeks following the completion of the event.
At present, ether trades near $1,875, representing a 56% year-to-date gain. The LDO governance token of Lido Finance, the largest liquid staking protocol with some $8.4 billion of staked ether on the platform, has gained 26% since the start of the year, while Competitor Rocket Pool’s RPL has gained 70% since January. Bitcoin, in comparison, has rallied over 70% this year, while the ether-bitcoin ratio has declined 13.6%.
Source: CoinDesk
