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Ethereum Shanghai Update & its Possible Influence on the Price of ETH

2023-2-23

The Ethereum Shanghai update, the first post-Merge upgrade for Ethereum 2.0, is a significant step in the right direction for the well-known smart contract network. In essence, it intends to strengthen the Ethereum network by delivering on prior promises made about liquidity and essential upgrades that make working with smart contracts simple.

With all the upcoming changes to this leading blockchain, it only seemed right to see what price changes it may shortly be subjected to, and what potential does ETH as a cryptocurrency hold.

Expected Changes that Shanghai Brings

EIP-4895, a proposal to release the 16.4 million ETH now staked on the Ethereum network, is the centerpiece of the Ethereum Shanghai Upgrade. With this action, investors can take control of their cryptocurrency holdings and earn staking rewards of 5% or more annually.

Three more improvement proposals (EIPs) intended to solve some of the main problems affecting the Ethereum network are also part of the Ethereum Shanghai Upgrade. These suggestions will make it simpler and more economical for investors to use the Ethereum network by enhancing its functionality and lowering gas expenses.

EIP-3855, one of these suggestions, will aid in resolving the problem of the Ethereum network’s lengthy transaction delays. By improving the way the blockchain functions, EIP-3860 will help to lower the cost of gas fees, and EIP-6049 will help to increase the Ethereum network’s overall performance.

In the meantime, the value of the assets owned by investors who have already locked up their ETH on the Beacon Chain has recently increased by 165%. And the Ethereum Shanghai Upgrade is just getting started. Over 515,000 people have joined the Beacon Chain as validators, and in March, these investors will finally be able to unlock their ETH and a good share of staking rewards.

ETH price projections

As seen on cryptocurrency exchanges such as Gate.io, the last time the price of Ethereum surpassed $2,000 was in May 2022. Nevertheless, considering the recent price increases and the overall positive market sentiment, ETH may reach this goal again as soon as the middle of 2023 or even Q2.

It is anticipated that the beginning of April will also be bullish due to the impending implementation of the Shanghai upgrade, which will advance the DApp layer of the network even further.

Industry analysts forecast that the price of Ethereum will approach the $4,000 mark by Q4 2023, and maybe even surpass it.

This would be roughly two to three times greater than the current price of ETH cryptocurrency, indicating that you should see buying ETH as a long-term investment, not something you can day trade. At the same time, it is a signal of lower volatility, which is often hard to find in the crypto markets.

Looking at longer-term projections, we expect the price of ETH to range between $7,336.62 and $8,984.84 in 2025.

Positive projects are associated with the fact that Ethereum is the leading Layer 2 blockchain. Essentially, it is like the internet but for blockchain. We host websites on the internet, and in the same manner, Ethereum hosts a large plethora of projects that build on it. Over time, Ethereum has grown into an ecosystem that no other blockchain can match. It is home to DeFi economy, NFTs, and much more, all of which depend on the price of ETH.

However, one must remember many of these forecasts are predicated on the best-case scenario of Ethereum having no issues with its updates. And by that, we mean that Ethereum also has to find a solution to the problems it is having. Regulatory and legislative frameworks have yet to support cryptocurrencies consistently, and once approved, the crypto world will see no end to rising markets.

When to Buy ETH?

Honestly, NOW is the best time to buy ETH if you are looking for long-term profits.

Many analysts in this field believe that the Shanghai upgrade will favour the price of Ethereum since it will give investors access to more flexible staking. ETH will no longer be locked for an unknown period of time, and staking will become akin to a savings bank account, with an added bonus of ETH price appreciation.

The supply and demand dynamics of Ethereum and the narratives around staking are not the only variables contributing to the rising pricing trajectory. According to the on-chain investigator ‘Lookonchain,’ over the past week, institutions have also been flocking into the asset in large numbers.

On February 10, it was discovered that various funds and organizations had invested over $1.6 billion in the cryptocurrency market. These investments were made over the previous week alone.

What to Do With it Afterward?

Simply, Stake it.

In the first week of February, JPMorgan (JPM) stated that the Ethereum Shanghai upgrade, slated to take place in the middle of March, will raise the blockchain’s staking ratio in the medium term.

Given that the average ratio for other proof-of-stake (PoS) networks is around four times as high, the bank believes there is plenty of potentials for the current 14% ratio to increase. The ratio measures the quantity of ether that has been staked compared to the total supply currently in circulation.

According to the bank, a significant amount of the anticipated growth in staking will undoubtedly transfer to liquid staking providers like Lido or established crypto exchanges like Gate.io. To summarise, whatever drops that may happen to the price of ETH in the short term, are incomparable to the positive industry sentiment towards ETH. And this can only mean that the future of the Ethereum blockchain is bright and disruptive.

 

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