Ethereum Price Increases Post Shanghai Upgrade Despite Withdrawal Rumors

The rumor was that Ethereum (ETH) Shanghai Upgrade would make users withdraw staked ETH and dump it into the market.

However, the ongoing scenario is totally against the rumor. Data shows that despite removing the withdrawal limitation, more Ethereum is being deposited than withdrawals.

ETH deposits are already outpacing withdrawals lol pic.twitter.com/TWfGhInXvV

— Tom Dunleavy (@dunleavy89) April 13, 2023

ETH Withdrawals

Investors have withdrawn over 141,000 Ether, with withdrawals on Lido accounting for 56% of the total.

Ethereum (ETH) investors had to wait six months after the Merge before the Shanghai Upgrade, which allowed them to withdraw their staked ETH tokens. Barely 16 hours after the Shanghai Upgrade was finalized, investors have withdrawn over 141,000 ETH.

Blockchain surveillance resource Lookonchain took to Twitter today to highlight the growing pace at which investors withdrew their assets. 

After the Ethereum Shanghai upgrade, 111,378 $ETH($216.3M) has been withdrawn.https://t.co/O1Yr9Klk99

And @LidoFinance has withdrawn a total of 63,695 $ETH, accounting for 57.2%.https://t.co/6PMTHPUhkK

1.?
What you need to know about ETH withdrawals. pic.twitter.com/qjk1BwmG7g

— Lookonchain (@lookonchain) April 13, 2023

At the time of disclosure, the total number of withdrawn ETH stood at 111,378 ($216.3 million). Of this figure, withdrawals on Lido, a liquid staking protocol, amounted to 63,695 ETH, representing 57.2% of the total amount withdrawn.

A few hours after Lookonchain’s disclosure, these figures increased. The total number of withdrawn ETH tokens currently stands at 141,086 ($280 million), which continues to increase. Moreover, Lido now accounts for 80,018 ETH. Lido’s figure represents 56.7% of total withdrawn tokens.

Moreover, Lookonchain called attention to a wallet identified to be the largest single withdrawal address. The address withdrew 4,443 ETH ($8.7M). On-chain data suggests that this whale address staked a whopping 6,176 ETH last September when the asset traded at $1,640.

Whale "0x4B5E" withdrew a total of 4,443 $ETH ($8.7M) with 1777 withdrawals, and is the largest individual withdrawal address.

Address"0x4B5E" staked 6,176 $ETH in September 2022, when the price was ～$1640.

This whale should also stake $ETH through other addresses. pic.twitter.com/uxRLdAmAzy

— Lookonchain (@lookonchain) April 13, 2023

Despite the increasing pace at which investors are withdrawing their Ether, data from Etherscan shows that over 18.1 million ETH tokens ($36.2 billion) are currently staked. This figure includes accrued rewards. Staking rewards have surpassed 1 million ETH tokens.

Validators have two withdrawal options: partial or full withdrawal. In partial withdrawal, validators only withdraw their rewards; in complete withdrawal, they withdraw all their tokens (staked ETH and rewards). Partial withdrawals are processed quicker than full withdrawals. Currently, 19,869 validators with 713,195 ETH await full withdrawals.

Impact on Ethereum Price

ETH continues to register gains despite earlier concerns that a surge in withdrawals and selloffs could impact the asset’s price when the Shanghai Upgrade is complete. According to OnchainDataNerd, ETH rallied by 5% to an approximate value of $2K shortly after Shanghai occurred.

$ETH just surged 5% from ~$1.9K to ~$2K after #shanghai.

Unfortunately, it is impossible to help underwater traders at ~$2.1K get break-even.

In case ETH hits $2100 in the next few days, will those continue to hold or sell at the break-even and make a high pressure in ETH? pic.twitter.com/B5MvLd3nRM

— The Data Nerd (@OnchainDataNerd) April 13, 2023

Citing data from IntoTheBlock, he highlighted a concentration of buyers between the prices of $2,096 and $2,154. Notably, these investors are still registering losses on their holdings. The question plaguing the market now is if these investors will sell off their assets at a break-even price when ETH hits the $2.1K level or if they will retain their holdings. ETH is currently trading for $1,985, up 6% in the past 24 hours.