The Shanghai unlock — the supply shock that never came

The Shanghai upgrade in April 2023 let validators withdraw staked Ethereum for the first time since staking opened, releasing a large quantity of previously locked supply. The widely repeated forecast was a wave of selling. Instead price rose through the window, from roughly $1,889 to $2,100, a gain of about eleven percent.

This is a clean lesson in the difference between supply that becomes available and supply that actually sells. Most validators were long-term holders with no intention of exiting, and much of the withdrawn stake was restaked. The bearish thesis was arithmetically true and behaviourally wrong.