Ethereum is about to go through one of its most significant upgrades since “The Merge,” the event that allows it to transition to a proof-of-stake consensus protocol. On April 12, 2023, the network will implement the Shapella update at 22:27:35 UTC.

After its launch, Ethereum users could withdraw their stake ETH from the “Beacon Chain,” the platform that initially supported the PoS migration. As a result, there is much speculation about the potential impact on the market.

As of this writing, Ethereum is rallying and seems poised to continue its uptrend beyond the $1,900 area and into the $2,000 region. However, the last time the cryptocurrency underwent a major upgrade, it was followed by a market sell-off and a decline into critical support zones.

Ethereum Investors To Hold Or To Dump Their ETH?

According to a post from crypto research firm CryptoQuant, the selling pressure from the Shapella update “will be lower than expected.” The firm claims that most of the ETH staked on the Beacon Chain, around 9.7 million ETH, were locked in late 2020 and 2021.

At this time, Ethereum rallied from below $100 to an all-time high north of $4,000. Therefore, these millions of ETH were staked at a loss and are unlikely to be dumped following the upgrade.

Most investors with ETH staked on the Beacon Chain are large or institutional investors. In that sense, CryptoQuant looked into Lido and similar platforms to gauge the sentiment around retail investors.

Like large investors, retail is holding staked ETH at a loss, as seen in the chart below. The research firm noted:

Also, it is worth noting that a significant portion of the deposits made by the Lido pool is currently underwater. 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.

Looking into “smart money,” and the ETH options sector, crypto market analysis firm Blofin noted that the structure around these contracts remained unchanged until today. As the upgrade approaches, there is a higher chance that ETH’s Implied Volatility increases.

However, until today, options investors were not “aggressively” betting on price fluctuation, which hints at potentially a no-event for ETH post the Shapella update. Blofin stated:

Interestingly, the significant rise in ETH prices did not drive investors’ aggressive betting on ETH’s performance expectations before and after the Shanghai upgrade. There is only about one week left before the upgrade, but the IVs of ETH options have not risen significantly, and the forward implied rate is still at a low level.