Amid the crypto-wide market correction, the world’s second-largest digital asset Ethereum (ETH) is already down 7.5%, trading below $1,200. The recent price crash has eroded all of last week’s gains for ETH.

Now the cryptocurrency is at risk of further demise. Since the Beacon chain upgrades last year, ETH investors have been staking their coins with Ethereum 2.0. Now the recently upgraded Ethereum 2.0 blockchain has 12% of the total supply.


On the other hand, ETH exchange reserves have fallen to 15% of the total supply and continue to decline. However, ETH faces a potential threat to its price as the Shanghai hardfork approaches, scheduled for March 2023.

This hard fork will allow investors to include the staked Ether with the network validators. On-chain data provider CryptoQuant lays out a scenario that could lead to a massive sell-off in the price of Ether.

What happens to ETH when withdrawing on Ethereum 2.0?

One of the most pressing questions ETH investors have is how much ETH can be withdrawn on Ethereum 2.0. Nearly 12% of the total supply or 15 million ETH coins are currently on Ethereum 2.0. Data provider CryptoQuant explains:

“From a short-term perspective, there are higher APY strategies than wagering rewards by depositing ETH2 that are not promised to be withdrawn.”

Let’s also look at the change in Ethereum 2.0 balances. Compared to last year 2021, the total number of depositors with ETH2 has increased by 57% this year. However, the total deposit balance has remained the same. This shows that the total balance per deposit has ultimately increased by 133% in 2022.

Thanks to: CryptoQuant

Commenting on the ETH exchange reserves, CryptoQuant explains: “It could be that the balance of $ETH2 increases as the $ETH exchange reserve decreases. 18M from $ETH are held at the fair, 15% of the total supply. However, the foreign exchange reserve is a continuing downward trend”.

As supply dynamics shift after the Shanghai hard fork, ETH price volatility will be imminent.

Bhushan is a FinTech enthusiast and has a good flair for understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is constantly in a learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and sometimes explores his culinary skills.

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.

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