Why didn't ETH crash after Shanghai? Interview with Nansen

Why didn't ETH crash after Shanghai? Interview with Nansen

Last month's Shapella upgrade allowed validators to redeem millions of ETH from the Ethereum 2.0 contract, potentially allowing the funds to be sold on the open market. Nevertheless, the second largest cryptocurrency has actually increased in value after the upgrade. From where?

At Consensus 2023, CryptoPotato sat down with representatives from Nansen, a blockchain analytics firm, to discuss how things have looked on-chain since the final phase of the merger.

Shanghai defies expectations

At the start of the upgrade, Nansen Content Lead Andrew Thurman said calledHe had predicted that net outflows from Ethereum's stake contract would be a weeks-long phenomenon. To his surprise, his company found that the withdrawals appeared to have leveled off within a few days.

“We knew that companies that are exposed to US regulation, for example Kraken and Coinbase, where there were clear signs that staking as a company would face some regulatory challenges – we know that those people want to exit their positions.”so that’s a big overhang,” Jason Xu – Senior Product Manager at Nansen – told CryptoPotato in an interview.

This proved to be true to some extent. Immediately after Shapella, Kraken was solely responsible67%all significant ETH withdrawals from the stake contract. The company was fined $30 million by the Securities and Exchange Commission (SEC) and forced to shut down its staking service before the upgrade.

Coinbase – which issued a Wells notice from the SEC but has vowed to defend itself in court – was responsible for another 11%, but both companies' withdrawal overhang has since "flattened." The share of Kraken and Coinbase in total ETH capital withdrawals has since changed to 34.9% and 14.1%, respectively, according to NansenShanghai dashboard.

ETH director resigned (all times). Nansen

The other hypothesis, Xu said, is that there probably wouldn't be more interest from new retail participants to start staking since they already have access to liquid staking derivatives such as. B. hadLidolong ago.

Such services – which provide stakers with a 1:1 convertible Liquid token for their locked, staked ETH – are expected to continue to thrive in the future due to the difficulty for users to stake themselves. "ETH has consistently implemented its roadmap, the technical roadmap. So I think people have confidence in ETH," he said.

Jason Xu (center); Aurelie Boiteux (right)

As of May 8th, over 19.3 million ETH is locked for staking - more than before Shapella was activated. Xu added that many “smart money” investors in crypto primarily hold “various variants of staked ETH,” by Nansen’s standards.

FUD vs. Facts: Binance Withdrawals

Much has been said about an alleged oneInflux of withdrawal requestson Binance back in March, shortly after the global crypto exchange was sued by the Commodities and Futures Trading Commission (CFTC).

When asked whether these reports were true, Aurélie Boiteux, ecosystem growth manager at Nansen, said that these claims “may be a little exaggerated.” In reality, both in this particular case and many other large exchange withdrawals, it was simply Binance “sending to another Binance wallet.”

"We've seen a lot of drama on Twitter," she said, "and people tend to respond in the right way, too."quickly, perhaps just out of fear, for example, out of fear and so on. But so far I can’t recall a really big regulatory issue on the chain in this regard.”

While volume on the exchange can vary from day to day, Boiteux said volume on Binance did not appear to experience any statistically significant on-chain changes after thatCFTC lawsuitin contrast to the FTX debacle in November.

Boiteux refused to give specific price forecasts for the future. “We are not predicting the future, but rather trying to understand what has happened before, what a potential price could be, what a potential bear market or bull market could be, and so on,” she said.

However, Xu remained optimistic. “My opinion is on the moon,” he said. “That’s the politically correct answer I’m going to give.”

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