Ethereum’s Shanghai upgrade will be ushered in with the Shapella hard fork on April 12 – a highly anticipated event that will enable withdrawals of ETH staked on the deposit contract for the first time since the launch of the Beacon Chain in December 2020.

While the upgrade is good news for long-term validators, particularly solo stakers who locked in their 32 ETH deposit without an end date in sight, the effect of such a large amount of ETH becoming liquid and ready to sell is a cause for concern to some market participants.

According to Glassnode, even in the most extreme case of validators withdrawing the maximum amount of rewards and staked ETH, the impact on the asset’s price will be minimal.

“We project that only 100k ETH ($190 million) of the total accumulated rewards will be withdrawn and sold,” stated Glassnode analysts, in an April 11 newsletter. 

“Furthermore, we expect to see twice as many validators exiting, but only a limited amount of stake will be released per day. We believe only a fraction of that amount, around 70k ETH ($133M), will actually become liquid,” they added.

The report also highlighted that approximately half the total amount staked is currently at a loss – something that could potentially lower an inclination to immediately withdraw and sell.

There are now 1,299 validators that are waiting in queue to exit the network and 214 validators that have been slashed or forced out. This means that as soon as withdrawals are enabled, at least 47,167 ETH worth around $86 million will be withdrawn as soon as the function is enabled.

Taking further full and partial withdrawals into account, and the fact that 75% of depositors are currently underwater, the analysts estimate that the impact on the market will not be as significant as many believe.

“It is arguably more likely that the technical delivery of the upgrade will bolster a growing staking industry, which seeks to better serve holders of Ether over the long-term,” they said.