Major banks gave predictions on the impact of the Shapella update on the Ethereum
Bank of America and JPMorgan gave predictions on the impact of the Shapella update on the Ethereum
Bank of America, JPMorgan, and analysts at Fidelity Digital Assets assessed how the blockchain and price of the leading altcoin will be affected by the long-awaited update scheduled for the night of April 12 to 13
U.S. banks Bank of America, and JPMorgan and analysts at Fidelity Digital Assets have provided their predictions on the impact of the Shapella update on Ethereum's blockchain and price. Scheduled for the night of April 12 to 13, the long-awaited event will allow the network's validators to take still-blocked assets in ETH (totaling about $31 billion) out of the stack.
Analysts at JPMorgan believe Ethereum is likely to face "some selling pressure" as significant amounts of altcoin withdrawals become available after the update, The Block writes.
"If you add in potential sales of Ethereum residuals by distressed companies, selling pressure could intensify in the coming weeks," experts said.
JPMorgan expects Ethereum to lag Bitcoin during this period, the bank said in a research note.
Experts at Fidelity Digital Assets (a former division of investment holding company Fidelity Investments) think otherwise - they believe Shapella's impact on Ethereum is more nuanced, the report said.
Fidelity notes that, first, most of the Ethereum validator positions in the stack were loss-making, but the recent rise in the altcoin's value has almost equalized the number of profitable and loss-making positions. Analysts rely on data that shows that 50.1% of ETH holders in stacking are now on the plus side, while 49.9% are on the minus side.
Secondly, Fidelity draws attention to the fact that the popularity of liquid staking services will reduce the probability of increased pressure on the asset price after the Shapella update.
"Given the amount of Ethereum stored by liquid stacking service providers, these entities are likely to set their own asset to unlock timelines," analysts believe.
Bank of America views Ethereum updates as "significant technological advances, but not necessarily more significant or advanced than those realized by next-generation blockchains that have become viable alternatives to [Ethereum]," according to CoinDesk.
The leading altcoin network has limited bandwidth and will not be able to increase it in the short term, which will limit its adoption and use amid growing competition, according to bank analysts.
The main concerns about the upgrade are the unlocking of large amounts of funds, Bank of America recalled. However, analysts are confident that the process is designed in such a way that short-term massive liquidity outflows will be prevented.
Ethereum surpassed the $1,900 mark in April and is at its highest level since last August. According to CoinGecko, the asset is trading at $1,87,000 as of 3:00 p.m. Moscow time, it has fallen 2.5% in 24 hours.
- The middle ground. How decentralized crypto exchanges depend on the SEC
- Binance's share of the crypto market decreased by 16% in the first quarter of 2023
- The head of the cryptocurrency p2p-exchange Paxful announced the suspension of operations
- New Reputation. What will happen to the Solana ecosystem and the price of the SOL token?
- MicroStrategy has added $29 million worth of bitcoins
- Shapella update for Ethereum and EVM launch for EOS. April's main events
- Santiment analysts suggest awareness of "whales" about Dogecoin's rise