Investors who staked ETH in the Beacon Chain before the complex “Merge” upgrade in September 2022 are eagerly waiting to withdraw their holdings for the first time. Market participants expect these staking withdrawals to trigger a bullish momentum in ETH price, with the short-term outlook at $2,000. Meanwhile, bulls are required to reclaim and hold the ground above this psychological level to keep the anticipated move to $3,000 intact.

Assessing The Impact of Staking Withdrawals As the Ethereum Shanghai Upgrade Beckons

The Ethereum network is grinding toward its first major upgrade or hard fork since the transition to the proof-of-stake (PoS) consensus mechanism. The Shanghai upgrade is expected in March and will see the beginning of a much-awaited withdrawal process for the 16.71 million staked Ether.

(1) Christine Kim on Twitter: “Ethereum devs agreed on the scope of Shanghai today. It’s going to be: – staked ETH withdrawals – big EOF implementation – warm coinbase – push0 – limit and meter initcode – time based EL forking – getpayloadV2 and getpayloadbodiesbyrange” / Twitter

Although most of the attention is being directed toward the withdrawal of staked Ether, the Shanghai upgrade will also implement the Ethereum Improvement Proposal-4895. With this, validator withdrawals will be enabled in addition to a host of other upgrades likely to be noticeable to Ethereum app developers and other network users.

Staking has been a hot topic in the crypto market, following the United States Securities and Exchange Commission (SEC) decision to go after Kraken exchange for not registering the platform’s staking-as-a-service program.

About a week ago, Kraken resolved to pay the regulator a $30 million fine – a move seen as the beginning of a regulatory crackdown. Staking is the process of locking up tokens in a smart contract to support the settlement of transactions by node operators and contribute to securing the underlying protocol. In return for locking up their assets, users earn annualized rewards in the same token.

Ethereum became a fully-fledged PoS blockchain in September 2022 through a major upgrade referred to as the “Merge.” Investors who staked their ETH in the Beacon Chain smart contract, will for the first time in March, gain access to their holdings.

Experts are conflicted over the impact of the Shanghai upgrade. Some say investors may be compelled to sell as they access the staked Ether, thus stifling the uptrend from January. On the other hand, some believe the ability to access funds and have control over ETH locked in the protocol could make Ethereum staking even more attractive. An uptick in demand for ETH could then catalyze the next rally not just above $2,000 but probably beyond $3,000.

It would be prudent for investors to be ready for different outcomes, considering the possibility of a March 2023 launch date delay. According to communication from Ethereum’s core developers, if the run-up to the Shanghai upgrade does not go as planned then a delay would be a much more viable option.

(1) Christine Kim on Twitter: “Other than the first bullet, every other code change could be removed from Shanghai if devs think it would significantly delay a March 2023 activation date.” / Twitter

Ethereum Price Technical Outlook – Bullish Continuation Anticipated

Ethereum price dodders at $1,673 at the time of writing in the wake of a correction from highs around $1,747. Mundane price action has been witnessed across the board since Monday, as some investors book profits.

The entire crypto market is also suffering as investors wait for the Federal Open Market Committee (FOMC) minutes. Earlier this month, the committee hiked interest rates by 25 basis points and the crypto market reacted with a minor correction.

Although the increase in the rates was lower than the previous 50 basis points, macro factors were generally unsupportive of a continued uptrend. Ethereum price dipped to $1,461 from $1,715 where it was supported by the 100-day Exponential Moving Average (EMA) (line in blue).

ETH/USD daily chart

The upswing from December lows of $1,074 to $1,715 completed a 61.8% Fibonacci retracement, as observed on the chart. Bulls are currently fighting to keep support at $1,769 – provided by the same Fibonacci level intact to prevent declines from extending to $1,555 – a support reinforced by the 50% Fibo.

Marginally below $1,555 are two important moving averages: The 50-day EMA (line in red) and the 100-day EMA (line in blue). This confluence support might be strong enough to keep bears under control.

If declines overwhelm the demand for Ethereum at the 50% Fibo, bulls would resolve to try their luck above the upper falling trend line. Remember, this level stopped buyers from stretching the leg above $1,700 in early February. Hence, it could stop bearish advances from obliterating the progress made in the last week.

Key Levels To Watch In Ethereum Price – Short-Term Outlook

The optimistic outlook for Ethereum price depends on the viability of a buy signal from the Moving Average Convergence Divergence (MACD) indicator on the daily timeframe chart. As Ethereum rallied toward the end of last week, the MACD (line in blue) crossed above the signal (line in red), thus validating a call to traders to buy the largest smart contracts token.

Another key factor strengthening the bullish outlook in Ethereum price is a recently confirmed golden cross pattern. Investors often yearn for this technical index as it reinforces the bullish grip on Ethereum price and cultivates a long-term bullish outlook.

The golden cross occurs when a short-term moving average flips above a long-term moving average. Like in Ethereum’s case, the 50-day EMA (line in red) is now settled above the 200-day EMA (line in purple). Investors who trade this pattern would now be looking at an extended bullish outlook for Ethereum price.

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