Ethereum: Shanghai Upgrade and What Investors Need to Know
The Ethereum network is undergoing the Shanghai upgrade, allowing individuals who have "staked" their ETH to withdraw their holdings.
While some may be concerned about potential sell pressure, the withdrawal process is designed to prevent a massive sell-off. Additionally, only a small percentage of ETH stakers are currently in profit, suggesting that selling now would not be wise for rational investors with a long-term outlook.
Ethereum’s smart contract ecosystem is the oldest and most established, and its value can increase exponentially with adoption. ETH’s value is linked to its network effects, with more apps and users driving demand for the cryptocurrency.
While new ETH is issued as compensation to network nodes, a burn mechanism that destroys a small amount of ETH per transaction reduces the supply of ETH, even during a bear market.
While some regulators may attempt to slow adoption, this is unlikely to succeed as it is driven by younger generations who will soon become voters.
Additionally, governments that do not support innovation risk losing crypto companies to countries like Dubai, Hong Kong, and the UK.
The upcoming Shanghai upgrade is the first step in making Ethereum more user-friendly and reducing fees. Investors who take a long-term view may find ETH a valuable asset.