The Shanghai hardfork, which allowed validators to withdraw funds, continues to have a mixed impact. On the one hand, the long-awaited upgrade is attractive to more cautious investors. On the other hand, a number of participants continue to leave the system because of shifting priorities.

The latest updates haven't affected network speeds, which don't exceed 20 transactions per second. Validator outflows have already resulted in a three-fold fee increase since staking ended on 12 April. The higher fees are quite a negative issue as developers and users become more interested in using faster networks.

There are currently 15,000 validators queued to withdraw around $837 million or 450,000 ETH.   The major part of the outflow is caused by Kraken's refusal to provide staking services due to the SEC's action and pre-trial settlement.

That said, there's a risk that Coinbase, which accounts for 12% of the total validator pool with 2.4 million ETH, leaves staking for the same reasons. And the largest player, Lido Finance, hasn't yet unstaked its 6 million ETH.

The negativity comes from US regulators seeking to label Ethereum a security. Some crypto exchanges, including Kraken, have already been fined for working with the cryptocurrency without a securities license. Coinbase has announced its intention to sue the SEC and, as a preventive measure, has launched Coinbase International Exchange registered in Bermuda.

These events overshadow the positivity of the Shanghai hardfork and reduce the coin's investment appeal. Since the hardfork, whales, whose presence usually correlates with future price cycles, have reduced their presence by 200,000 ETH.

The continuation of the trend, the cancellation of Coinbase's stacking and especially the recognition of Ethereum as a security will result in the altcoin remaining in the shadows in the new bull cycle. It has already fallen 11% in price against Bitcoin since the start of the year.

StormGain Analytical Group 
(platform for trading, exchanging and storing cryptocurrency)