The Shanghai Capella or Shapella update was a success. The most relevant Ethereum news after this event is evaluated below.
The price of Ethereum, the second largest cryptocurrency in market capitalization, skyrockets overnight after its latest Shapella update.
The successful implementation of the Shanghai upgrade finally allowed Ethereum investors to withdraw their holdings, after staking began in December 2020. This upgrade was the biggest on the network since last September’s Merger when Ethereum moved from a proof-of-work algorithm to a proof-of-stake algorithm.
As a proof-of-stake network, Ethereum uses validators instead of miners to secure the network. To become a validator, users must deposit 32 ETH (approximately $63,000 at the current price) into the network, and maintain a node at all times to earn rewards. If that node fails, a 32 ETH penalty can be applied to the validators.
The Bears Were Wiped out
According to Coinglass sell-off data, bear traders were wrong to bet against Ethereum, as it led the pack with over $44 million in trades settled in the last 24 hours, and 77% of those positions were short.
Although more than 137,774 ETH have already been withdrawn from the Ethereum Beacon Chain smart contract following the implementation of the Shapella update, there are still 852,000 ETH pending withdrawal, which is equivalent to more than $1,694 million.
In the next 12 hours, more than 80,000 ETH is expected to be withdrawn from Ethereum staking. What happens to validators in the coming days could have a significant impact, not only on the price of Ethereum but also on other aspects of the network, such as the issuance of ETH and the interest paid to stakers who validate new blocks.
Recently, it has been reported that Kraken, one of the largest exchanges in the world, is leading the list of withdrawal requests for Ethereum staking shortly before Shapella’s activation.
According to information provided by Rated Network, of the 997 complete withdrawal requests processed, 80% belong to the Kraken exchange. 19.6% belong to unknown validators and only 0.4% to Rocketpool.
Prior to the Shanghai update, validators were unable to withdraw their funds or collect any accumulated rewards. This led to widespread speculation that the possibility of withdrawing funds would cause bearish momentum in the network. However, many validators have exited, taking their staked Ethereum and rewards with them as they leave. In the last 24 hours, there has been a net outflow of more than 84,500 ETH, according to data mined from Nansen.
Ethereum at $2000, Where Are We Going?
As the media have mentioned in recent days, the price could reach $2,000 or correct to $1,700. Currently, the price of Ethereum is at $1,995, breaking the resistance of $1,940. The price could correct up to $2,050, to support the upward movement, which would be the target of the range formed before the liquidity zone breakout.
Some reports, such as one by analytics firm Glassnode, suggest that the activation of Shapella might not have a huge negative impact on the Ethereum price. This happens because many stakers are currently at a loss; therefore, they would have no incentive to sell their ETH. Closely monitoring how the Ethereum market will develop in the future, as well as how the activation of Shapella will affect it, thus, becomes paramount.
By Audy Castaneda
