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As the highly anticipated Shapella (Shanghai) upgrade approaches, the amount of staked Ethereum with unrealized losses has seen a notable decline.
However, it is the largest stakers who have incurred the most significant losses.
Unrealized Losses on Ethereum Beacon Chain
According to Glassnode, the total unrealized loss on the Ethereum Beacon Chain currently amounts to $4.7 billion, having decreased by 71% from its peak of $16 billion following the downfall of Terra Luna ecosystem tokens. During this timeframe, ETH plummeted to and even dipped below $1,000. The price has since rebounded and is now approaching $2,000.
The blockchain analytics company also noted that the largest depositors are facing the most severe financial impact, as this group accounts for 70% of the unrealized losses. Generally, long-term ETH investors tend to remain unaffected by unrealized losses.
Furthermore, on-chain data indicates a consistent influx of recurring depositors on a daily basis. Nevertheless, significant events such as The Merge and the Shanghai upgrade have prompted an increase in one-time depositors.
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“The Ethereum staking pool primarily consists of recurring depositors managing multiple validators, resulting in up to 1000 deposits daily. However, major events like the Beacon Chain genesis, the Merge, and the forthcoming Shanghai upgrade have led to a rise in one-time depositors.”
A Sell-off in Offing?
The Ethereum network is poised to undergo its long-anticipated Shapella hard fork, raising questions about a possible sell-off. However, such a scenario appears to be quite improbable.
The upcoming upgrade will enable withdrawals of staked ETH. However, the 18 million ETH that has been staked will not be released all at once to maintain network security and stability. In practice, network validators and stakers will need to navigate a queue and withdrawal period, which could take several months.
Moreover, with over half of the staked ETH still at a loss, another on-chain analytics firm, CryptoQuant, suggests that it is unlikely that most validators will exit at this juncture.
“Due to the substantial amount of staked ETH currently at a loss, we believe that the selling pressure will be less than anticipated.”
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