On Thursday (April 13), Ethereum (ETH) rose above $2,000 for the first time in eight months, and investors have left behind the uncertainty surrounding the long-awaited Shanghai Bitcoin upgrade. According to Coin Metrics data, Ethereum rose more than 5%, to $2008.18. Earlier, Ethereum had risen to $2003.62, its highest level since August last year. After Bitcoin briefly fell below the $30,000 mark on Wednesday, it rose more than 1%, regaining the $30,000 mark.
After two years of lock-in, around 6:30 pm Eastern time on April 12, the Shanghai upgrade enabled Ethereum staking withdrawals to be realized. In the weeks leading up to the Shanghai upgrade, investors were optimistic but cautious, and the upgrade was also referred to as “Shapella”. Although many believe that in the long run, the upgrade is beneficial to Ethereum as it provides more liquidity to Ethereum investors and shareholders, which may also act as a catalyst for institutional participation in the change, there is more uncertainty as to how it will affect the price this week. Earlier on Thursday morning, both of these cryptocurrencies rose sharply, and they rose further with the release of the Producer Price Index (PPI) in March. This was the second report released this week after the Consumer Price Index (CPI) on Wednesday, indicating that inflation is cooling. Noelle Acheson, economist and author of the Crypto is Macro Now newsletter, said she doubted that Ethereum’s sudden rise was entirely driven by the Shanghai upgrade. She told CNBC: “This seems to be a bet on overall liquidity prospects, but Shapella did not lead to a sharp sell-off, which drove Ethereum’s strong performance this morning.” Many initially feared that the Shanghai upgrade could bring potential selling pressure, as it would allow investors to exit their locked Ethereum. However, the exit process will not happen immediately or all at once. In addition, according to CryptoQuant data, most of the Ethereum currently held is in a loss-making position. Investors are not sitting on huge profits. Matt Maximo, a research analyst at Grayscale, said: “The amount of ETH entering the market from Shanghai withdrawals is far lower than previously expected.” “The amount of new ETH injected also exceeded the amount withdrawn, creating additional buying pressure to offset the withdrawn ETH.” Thursday’s rise has pushed Ethereum’s year-to-date rise to 65%. In addition, the US Dollar Index (inversely correlated with cryptocurrency prices) fell to its lowest level since early February on Thursday morning. She said: “ETH is outperforming Bitcoin (BTC) here, as it has a lot of catching up to do, traders saw no adverse reaction to last night’s upgrade and now have more confidence in the return.” So far, Bitcoin has risen 82% in 2023.
Post time: Apr-14-2023
