With the much-awaited Shapella (Shanghai) upgrade just hours away, the value of staked Ethereum with unrealized losses has decreased significantly.
But it is the largest stakers who have suffered the greatest losses.
Unrealized Losses on Ethereum Beacon Chain
According to Glassnode, the net unrealized loss on the Ethereum Beacon Chain now stands at $4.7 billion, after falling by 71% from the peak of $16 billion following the collapse of Terra Luna ecosystem tokens. During the same period, ETH tanked to and even below $1,000. The price has since recovered and is currently inching closer to $2,000.
The blockchain analytic firm also observed that the largest depositors are experiencing the highest degree of financial pain, as this cohort held 70% of the unrealized losses. Typically, long-term ETH investors tend to remain unfazed by unrealized losses.
Moreover, on-chain data also shows a flurry of recurring depositors on a daily basis. However, major events such as The Merge, Shanghai upgrade, etc., witnessed a surge in one-time depositors.
“The Ethereum staking pool is mainly composed of recurring depositors owning multiple validators, making up to 1000 deposits daily. However, major events such as the Beacon Chain genesis, the Merge, and the upcoming Shanghai upgrade have seen a surge in one-time depositors.”
A Sell-off in Offing?
Ethereum network is all set to undergo its long-awaited Shapella hard fork, which has left many wondering about a potential sell-off. However, such a scenario is highly unlikely.
The new upgrade will pave the way for staked ETH to be available for withdrawals. But the 18 million ETH staked will not all be released at once to preserve network security and stability. In reality, the network validators and stakers will need to have to undergo a queue and withdrawal period. This could potentially take months.
Additionally, with more than half of the staked ETH still at a loss, another on-chain analytic firm, CryptoQuant, believes that it is unlikely that most validators will exit at this point.
“For the sole reason that the significant staked ETH is currently at a loss, we believe that the selling pressure will be lower than expected.”