The second biggest crypto has reached an eight-month high following a major network upgrade.
Ether, the native token of the Ethereum network, passed the $2,000 mark this morning – the highest figure since August 2022. The price increase comes after the Shapella (Shanghai and Capella) upgrade went live yesterday at 10:27 pm UTC.
Prior to the upgrade, ETH traded at a resistance level of roughly $1850 for several weeks, breaking through into the $1900 mark on April 4.
The Shapella upgrade is a major milestone in Ethereum’s transition from proof-of-work to proof-of-stake. The upgrade enabled validators to unlock their staked ether for the first time since 2020. With $2 billion locked up on the Beacon Chain, many expressed fears that the upgrade would trigger a wave of selling pressure, giving rise to intense volatility.
Despite this, ETH appears to be performing well (bearing in mind we are only one day into the upgrade).
So why is selling pressure still low?
At the time of writing, buying pressure is higher than selling pressure, with Ethereum gaining 5.2% in 24 hours. Keeping in mind that Shapella only went live yesterday, and that crypto markets can change overnight, there are some factors keeping selling pressure at bay.
18 million ether has been staked on the Beacon Chain since 2020, but nearly 70% of these tokens were staked through liquid staking protocols such as Lido and Rocket Pool. Liquid staking tokens can be staked without a lockup period, giving investors a good measure of liquidity. For more stakers, the new liquidity offered by the Shapella upgrade isn’t exactly new.
In addition, blockchain analytics firm Glassnode forecast that less than 1% of stakers were planning to sell, with just 253 validators signing up to exit.
Withdrawals will also not happen overnight. To maintain an optimum number of validators in the network, withdrawals will be processed gradually on a first-come-first-serve basis to prevent a huge swathe of ether hitting the markets.
More broadly, Shapella is a huge upgrade that cements Ethereum’s standing as a leading proof-of-stake blockchain, bolstering market sentiment.
In yesterday’s livestream, Ethereum co-founder Vitalik Buterin said that the network is now in a “really good place”, adding that “the hardest and the fastest parts of the Ethereum protocol’s transition are basically over.”
He added that “very significant things still need to be done, but these can be done at a slower pace”.
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