The Impact of Ethereum’s Shanghai Upgrade on Its Price

According to reports, the Ethereum blockchain has been upgraded in Shanghai, and reports from JPMorgan Chase and Fidelity have shown different views on the impact of ETH prices. JPMorgan analysts stated in a recent report that they expect Ethereum to face “some selling pressure” as upgraded validators can receive Ethereum pledge rewards worth over 1 million. Analysts said, “If there is potential additional selling pressure on the mortgaged Ethereum balance belonging to troubled entities, then the selling pressure in the coming weeks may be even greater. They added that they expect Ethereum to perform worse than Bitcoin in the coming weeks

There is disagreement between JPMorgan Chase and Fidelity regarding the price impact of Ethereum Shanghai’s upgraded ETH

As reported lately, the Ethereum blockchain has undergone an upgrade in Shanghai. However, contrasting views exist among parties such as JPMorgan Chase and Fidelity regarding the potential impact of the upgrade on the price of ETH.

What is the Ethereum Shanghai Upgrade?

The Purpose of the Upgrade

Before discussing the impact of the upgrade on Ethereum’s price, it is important to outline what the upgrade entails. The Ethereum Shanghai Upgrade was a network-wide upgrade with the aim of improving the efficiency and effectiveness of the existing blockchain. Moreover, the upgrade intended to prepare the network for the upcoming Ethereum 2.0 upgrade, which aims to transition the network from a Proof of Work (POW) consensus algorithm to a Proof of Stake (POS) consensus algorithm.

Key Features of the Upgrade

In particular, the upgrade introduced a new feature, the “London hard fork,” which incorporated the “Ethereum Improvement Proposal 1559 (EIP-1559).” EIP-1559 aims to facilitate more predictable transaction fees and burn some of the base fee, thus reducing Ethereum’s overall supply. Additionally, the upgrade enabled a significant increase in the network’s capacity and stability, thereby enabling better transaction processing.

Differing Views on the Potential Impact of the Upgrade

JPMorgan Analysts’ Perspective

According to JPMorgan analysts, the Ethereum Shanghai Upgrade is anticipated to prompt “some selling pressure” on the price of Ethereum. This is because upgraded validators can receive Ethereum pledge rewards worth over 1 million. Moreover, if the mortgaged Ethereum balance belonging to troubled entities experiences potential additional selling pressure in the coming weeks, then the selling pressure may be even greater. As a result, Ethereum is expected to perform worse than Bitcoin in the short term.

Fidelity’s Viewpoints

However, Fidelity Investments, a prominent asset management firm, sees this differently. The firm is optimistic about the future of Ethereum and has invested in several companies which are powered by the Ethereum blockchain. They believe that the upgrade is a positive development that will enhance the number of use cases for blockchain technology, enabling more organizations to use blockchain technology in different ways across different industries. Fidelity believes that the upgrade will boost the price of Ethereum, as it provides a solid foundation on which to build the Ethereum 2.0 network.

Conclusion

In conclusion, the Ethereum Shanghai Upgrade is a significant event in the blockchain world. While it is true that there could be some short-term selling pressure on the price of ETH, Fidelity’s optimistic view that the upgrade will fuel the adoption of blockchain technology across various industries has a strong basis. As such, it would not be surprising to see the price of Ethereum rise even higher in the long term.

FAQs

1. Why was the Ethereum Shanghai Upgrade necessary?
– The upgrade was necessary to enhance the efficiency and effectiveness of the existing Ethereum blockchain and prepare it for the upcoming Ethereum 2.0 upgrade.
2. How did the upgrade impact Ethereum’s transaction processing capability?
– The upgrade significantly increased the network’s capacity and stability, thereby enabling better transaction processing.
3. Will the upgrade prompt any short-term selling pressure on the price of ETH?
– According to JPMorgan analysts, there could be some short-term selling pressure on the price of ETH, while Fidelity Investments believes that the upgrade will boost the price of Ethereum in the long run.