Ethereum Price Explosion Follows Successful Shanghai Upgrade

Ethereum is experiencing a price explosion after the long-awaited Shanghai upgrade finally successfully launches on the mainnet. It enables staked ether withdrawals. In the run-up, many investors feared a drop in prices.

Ethereum price explosion

In both the weekly trend and the daily trend, ether outperforms bitcoin by a few percentage points. In the last 24 hours, ETH gains ten percent. The weekly trend is 14 percent. The second largest cryptocurrency is currently trading at 2,110 US dollars. The Ethereum price explosion is due to a long-awaited upgrade.

The combination of the two updates is also referred to as the Shapella upgrade . The most popular change was presented in EIP-4895 . The draft is titled Beacon Chain Push Withdrawals as Operations .

Ethereum first introduced staking in December 2020. Since then, the price of ETH has tripled. Previously, users who locked their digital asset in staking could no longer gain access to it. Staking rewards also remained locked.

That is now changing. For some investors, however, everything will remain the same, at least for the time being. Due to the high cost of 32 Ethereum, most users do not do solo staking, but invest their assets with a service provider such as a crypto exchange or Lido Finance.

However, many crypto exchanges do not yet support withdrawals to customers. Lido also does not yet allow actual ether to be paid out, but Lido Staked Ether (STETH) has for some time. Many of the providers want to activate the option in the coming weeks.

Why is ETH price increasing so much?

First, Ethereum’s developers were able to demonstrate in practice how actively and successfully they continue to work on the protocol. However, Ethereum’s course is also increasing sharply, since the feared sell-off of the digital currency does not materialize.

Glassnode data analysts had previously pointed out that a price drop was unrealistic. On the one hand, many of the investors only staked their ETH in the last bull market. Glassnode therefore also locates the time of purchase in the bull market above current prices.

Those who are still recording unrealized losses will tend to continue to hold and only sell at a later point in time. In addition, some of the largest staking providers do not allow ether withdrawals for the time being.

This includes above all Lido with a market share of around 32 percent, but also the large crypto exchanges Kraken and Binance. Only Coinbase supported the innovation directly.

Glassnode also expected the price to rise as a result of the upgrade – an expectation that has clearly come true. The reason for this assumption is the growing economy of the largest smart contract platform.

“It is arguably likely that the technical implementation of the upgrade will support a growing staking industry aimed at providing a better service to Ether holders over the long term.”

Explains Glassnode in a report .

Ethereum Shanghai and Capella upgrade successful

Shanghai and Capella were held yesterday, April 13, 2023 at 00:27 Swiss time. Both upgrades are successful. Together they combine eight specific changes in the network.

In addition to the exposure of staked ether, the main focus is on changes in gas fees, which are reduced for validators and specific smart contracts . In addition, the basic functionality of smart contracts will be adjusted.

The self-destruct feature that Ethereum provided for the smart contracts will be replaced with a stop feature. This is to minimize risks.