Ethereum, the second largest cryptocurrency by market capitalization, continued to soar Wednesday, bucking a market-wide decline fueled by a string of recent US regulatory crackdowns on the industry. At press time, Ether was trading at $1,824, up roughly 5.17% in the past 24 hours. Bitcoin, its biggest rival, also experienced a similar uplift and was exchanging hands at $28,345, up 5.03% in the past day.
Apart from benefiting from Bitcoin’s recent ascent, various fundamentals have contributed to Ethereum’s strength in the past few weeks. One of the most notable ones has been Shapella, an upcoming network upgrade set to open up staked ETH withdrawals.
In a March 28 blog, the Ethereum Foundation confirmed that Shapella, which combines Shanghai and Capella, will activate on the Ethereum network “at epoch 194048, scheduled for 22:27:35 UTC on Apr. 12, 2023”. The upgrade is the most significant upgrade since The Merge and has brought a lot of attention to Ethereum, with 17.8M ETH now being staked in the beacon chain. At a current price of $1824, this means that roughly $32.3 billion can be unlocked after the upgrade.
However, to counter the risk of creating a massive dump of unstaked ETH in the market, the Ethereum foundation has placed various measures. First, Capella will allow partial ETH withdrawals, a factor that could encourage users to take out their assets in small lots or continue staking altogether.
Secondly, the maximum number of daily withdrawals will be capped at around 2800 validators, given that only approximately 10 validators can be assigned to an epoch. It takes approximately five or six minutes for an epoch to be processed. If each of the 2,800 validators withdraws the full 32 ETH staked per day, it would only account for about 92,160 ETH, which is about 0.52% of the 17.8 million staked.
Elsewhere, exchange withdrawals have also been surging, with Santiment reporting that just 10.31% of existing ETH is sitting on exchanges, the lowest level since July 2015.
“Ethereum is now being held in self-custody and away from exchanges at the highest level since the week the token was introduced nearly 8 years ago. This essential all-time low ratio of ETH on exchanges (10.31%) indicates confidence from hodlers,” the firm recently tweeted.
Additionally, the recent rally has motivated more buyers to accumulate, with close to 7 million ETH worth approximately 1.36B being purchased in the past week. On March 29, popular crypto analyst “Ali” noted that “Ethereum is poised to break out”, stating that 1.41 million addresses bought 6.48 million ETH after the crypto asset reclaimed a crucial support level between $1,700 and $1,780.
“As long as this level holds, it’s reasonable to expect further upside, given the lack of resistance ahead,” he said, sharing data from IntoTheBlock.
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