By George Ward
Chris Burniske, a notable analyst and executive at venture capital firm Placeholder, shared his views on the potential impact of the Ethereum staking unlock on the market. Meanwhile, some analysts anticipate a significant sell-off due to the event.
However, Burniske asserts that the ETH staking unlock is a positive development for the asset’s mid and long-term prospects.
Analyst Shares Views On Effects Of The Shangai Upgrade
With the upcoming Shanghai upgrade for Ethereum, stakers can withdraw their assets from staking contracts and regain control over their assets. Despite initial concerns that this could be bearish for ETH, Burniske views this ability to control funds as a positive development for the cryptocurrency.
According to Burniske, investors’ enhanced control over their investments should lead to better price performance rather than a sudden downtrend. Meanwhile, Burniske’s viewpoint is based on a fundamental principle that an investor’s confidence plays a vital role in market performance.
With greater control over their funds, investors are likely to have more faith in their investments and the ecosystem as a whole. As a result, this enhanced confidence can attract more investments into the Ethereum network, ultimately promoting the long-term growth of the asset.
Additionally, as Ethereum evolves, new use cases could spring up, further driving its potential. Such developments could draw in a broader range of investors, supporting Ethereum’s growth trajectory.
With the influx of more investors into the market and participation in Ethereum staking, the crypto’s value could rise, confirming Burniske’s bullish prediction.
Diverse Behaviour Among Investors After The Upgrade
Besides, it is essential to note that not all stakers who withdraw their funds will sell them. Some may reinvest in other Ethereum-based initiatives or hold their Ethereum, expecting future prices to increase.
The potential for diverse investor behavior could offset any initial selling pressure resulting from the staking unlock. Unlock events are typically seen as bearish catalysts, generating liquidity and allowing investors to profit.
Tokens are often locked up to prevent significant holders, such as early investors or the project team, from selling their coins simultaneously, causing substantial price drops for the crypto. However, there have been long-standing arguments among some observers that unlock tends to amplify the prevailing market trend.
In April, the venture capitalist explained the reason for the bullish momentum after the unlocking event of 2021. Burniske said, “Large token unlocks are a complex event that interacts with market psychology.”
He explained that such unlocks can act as bullish catalysts in bull markets and bearish catalysts in bear markets. Large unlock leads to liquidity that allows the prevailing trend to continue.
Ethereum Blockchain Suffers Massive Attack On MEV Bots
Meanwhile, a group of blockchain bots that function to generate revenue for the Ethereum ecosystem via a process called the maximal extractable value (MEV) was attacked by a hacker. Accordingly, the attack led to the loss of over $25 million, the latest in a series of exploits targeted at blockchain protocols.
The attacker reportedly compromised most of the MEV bots by switching the regular transactions with malicious ones, which resulted in the theft of funds.
In his explanation of the attack, decentralized finance (DeFi) trader at Wintermute, Joseph Plaza, said the attacker might have set up a bait to attract the MEV bots. The attacker then changes the bait transactions with new ones which are malicious, allowing them to drain the funds.
Plaza explains that the attacker prepared for the exploit by depositing 32 ETH to qualify as a validator days before the incident. According to him, the attacker was time conscious enough to determine the best period to propose a block as a new validator coinciding with the breach.
After that, the attacker reorganizes the block’s contents and creates new ones containing malicious transactions to drain the funds. The blockchain tracking platform, PeckShield, has reportedly traced the stolen funds to three Ethereum wallets in the custody of eight other addresses.