With the “Merge” and the accompanying change to proof of stake, the Ethereum blockchain received arguably the most crucial and largest upgrade of all time on September 15. With “Shanghai”, however, the next upgrade is already just around the corner.

After a month-long break, Ethereum developers met last Friday for their 148th All Core Developers (ACD) meeting. Chaired by Tim Beiko of the Ethereum Foundation, the developers discussed the plans for Shanghai.

Together, they found consensus that Shanghai should include, at a minimum, the withdrawal of staked ETH (EIP 4895) and three other minor network optimizations (EIP 3651, 3855, and 3860). In addition, the core developers reached an agreement to further review EIP 4844 and Ethereum Virtual Machine Object Format (EOF) code changes for a possible inclusion in the Shanghai upgrade.

Another much-discussed update that some developers are looking to include in Shanghai is what is known as proto-danksharding, EIP 4844. Proto-danksharding is a preliminary version of sharding that introduces a new transaction type to Ethereum. It can be used to settle batches of transactions from layer 2 rollups in a cost-effective manner.

However, representatives from Besu and Nethermind expressed concerns about implementation readiness, stating that the complexity and scope of the code change is not yet well defined.

What Impact Will Ethereum’s Shanghai Provide On Price?

Considering the fact that currently around 15.51 million ETH are staked, which corresponds to around 12.7% of the total supply, the Shanghai upgrade could exert enormous selling pressure.

Shanghai could give investors their first opportunity to unload their ETH, some of which have been staked for two years. Even if half of all staked ETH retained their status, the selling pressure from the other half would be enormous.

Two crucial factors for the Ether price recently were the high proportion of illiquid ETH through the lockup of ETH and EIP-1559, also known as the “ultra sound money” upgrade. The upgrade implemented a fee burn mechanism on August 05 that wipes out the ETH base fees paid to record transactions on Ethereum.

This causes the ETH supply to decrease whenever more ETH is destroyed through fee burn than is created through ETH issuance.

When Shanghai?

Core developers have not yet agreed on a date for the upgrade. Depending on how proto-danksharding progresses, doing a hard fork with only staked ETH withdrawals and the smaller EIPs could mean Shanghai part one arrives in February 2023. Thus, Shanghai part two, which will then focus exclusively on proto-danksharding, would be integrated into the mainnet in September.

In contrast, bundling all EIPs in one hard fork could mean that Shanghai happens “sometime in June or July”.

Ahead of today’s FOMC meeting, ETH investors seem to remain cautious. The price is moving below the 200-day moving average, but above the 100-day moving average.

Historical trend of the 200-day and 600-day MAs may suggest Bitcoin could observe another big drop in the near future.

Current Bitcoin Pattern Has Historically Lead To A Big Drop In The Price

As pointed out by an analyst in a CryptoQuant post, the current Bitcoin price looks to be squeezed between the 200-day and 600-day MA curves.

A “moving average” (or MA in short) is an analytical tool that averages the price of Bitcoin over any desired range. As its name suggests, this average constantly updates itself as each day passes by and new prices are observed.

The main benefit of an MA is that it evens out any local price fluctuations, and displays the trend as a smoother curve. This makes the tool quite useful for studying long-term trends, where day-to-day price changes aren’t as important.

Related Reading | Bitcoin LTHs Hold Significantly More Loss Now Compared To May-July 2021

An MA can be applied on any range of period. For example, a week, a hundred days, or even just one minute. The below chart shows the trend in the 200-day and 600-day Bitcoin MAs over the past several years.

BTC price seems to be stuffed between the two moving averages right now | Source: CryptoQuant

As you can see in the above graph, a trend related to these MAs and the Bitcoin price has occurred following previous all-time highs.

It seems like during 2014 and 2018, after the respective ATHs formed and the price dwindled down, for a period the price was squeezed between the 200-day and 600-day MAs.

Related Reading | Why A “Boring” Bitcoin Could Be A Good Thing

After staying some time in the region, the MAs crossed over each other and the crypto observed a large drop in its price. Also, while this happened, the Bitcoin volume also experienced a downtrend.

Now, it looks like a similar pattern is starting to form this time as well. The price has dropped down since the November ATH, and it’s now stuck between the two MAs.

If the pattern holds and the moving averages cross over again, then another big drop may just be in store for the value of Bitcoin.

BTC price

At the time of writing, Bitcoin’s price floats around $40.4k, up 1% in the last seven days. Over the past month, the crypto has lost 1% in value.

The below chart shows the trend in the price of the coin over the last five days.

BTC's price seems to have seen a plummet over the past day | Source: BTCUSD on TradingView

Bitcoin showed some strong upwards momentum a couple of days back as it seemed to be approaching another retest of the $43k level. However, before any such revisit, the price plunged down in the last 24 hours.

Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com