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Ethereum On-Chain Data Point To Clear Skies Ahead Of The Shanghai Upgrade


As the long-awaited Shanghai upgrade finally nears tomorrow, April 12th, the Ethereum (ETH) network and the crypto market are about to experience a significant influx of funds, as $33.5 billion worth of ETH is set to become available for use or sale. 

The upcoming Shanghai upgrade will enable validators to withdraw their staked ETH and use it as they please, resulting in a surge in liquidity for the cryptocurrency market. Before this upgrade, staking ETH was a one-way street, as Jarvis Labs’ analyst JJ the Janitor described in a recent article, with validators unable to withdraw their funds once they were staked.

As the Shanghai upgrade approaches and validators can un-stake their ETH, the cryptocurrency market is bracing for a potential surge in activity. The question on many investors’ minds is whether the unlocked ETH will lead to a massive wave of selling pressure or whether holders will choose to keep their tokens, particularly with the bull market on the horizon. 

Positive Signs Ahead Of The Upgrade For Ethereum 

In its recent analysis ahead of the Shanghai upgrade, JJ the Janitor highlights that last month ETH delivered the resistance break above the $1,700 level, which is key for the cryptocurrency, with a retest of support in March that quickly led to a breakout above resistance, as we have seen in recent days.

Furthermore, JJ highlights some important nuances surrounding the Shanghai unlocks and how they may affect Ethereum’s price. One key point is that withdrawal limits are in place that cap the amount of ETH that can be unstaked daily, which could help mitigate any immediate sell pressure on the price of the cryptocurrency. 

Additionally, JJ notes that a significant amount of selling may already be priced into the market. Many stakers who need access to cash have already sold claims to their staked ETH “over-the-counter” or hedged their long position with shorts via options and futures contracts.  Given these factors, JJ suggests that any narrative-driven dips back into the $1,700 range should be viewed as an opportunity rather than a sudden end of the 2023 bull run. 

ETH Whales Lead The Price Movements

JJ the Janitor shows, on the chart below, the behavior of ETH whales during the March dip. JJ notes that during this dip, whales found deep value in the $1,450-$1,550 range, as indicated by the prevalence of red and orange dots below. 

Ethereum’s whale’s accumulation zones. Source: Jarvis Labs via JJ the Janitor.

This suggests that despite the market turbulence, large holders of ETH saw an opportunity to buy the cryptocurrency at a discounted price. Furthermore, there was a sighting of ETH whales accumulating the cryptocurrency in the $1,000-$1,200 range for the first time since the post–FTX debacle period. 

Additionally, JJ notes that March also saw an all-time high on the ETH exchange-whale ratio chart, which for JJ, suggests that there are multiple positive indicators for the future of ETH. 

In addition, JJ uses the 30-day returns metric, which was stuck under resistance for two years, from mid-2018 until 2020, indicating a lack of bullish momentum in the market. However, once the trend broke through and regained momentum, it coincided with the price of Ethereum shattering through a key resistance level. 

Ethereum fractal resembles the 2019 breakthrough of key resistance levels. Source: Jarvis Labs via JJ the Janitor

JJ notes that price and 30-day returns have broken above key resistance levels in unison, indicating a potential bullish trend shortly. If this breakout is real, JJ suggests that we should expect 30-day returns and ETH’s price to begin a cycle of rapid appreciation in the coming months.

ETH is trading above the key resistance zone of $1,700 on the 1-day chart. Source: ETHUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com

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