By
Chimamanda U. Martha
April 25th, 2024
Ethereum has delivered an extremely strong performance by gaining more than 10% since the Shapella upgrade.
Ether (ETH) has successfully delivered a very strong performance shooting past $2,100 levels and hitting a new 11-month high. As of press time, ETH is trading at $2,087.83 with a market cap of $249 billion.
This strong price performance comes despite more than 1 million ETH being withdrawn from the Ethereum Beacon Chain just within the first four days of the Shanghai hardfork upgrade. Furthermore, all of these withdrawals happened from nearly 477,805 transactions as per the Beacon Chain tracker.
At 392,800 ETH withdrawn, April 15 witnessed the largest single-day ETH withdrawal. From the total active validators, nearly 87% or 469,000 of the 540,000, are now able to withdraw their staked ETH.
Before the Shapella upgrade, market experts had mixed opinions on how would it impact the price of ETH after the upgrade. This is because of the Shapella upgrade, allows stakers to withdraw their staked ETH. This is the first time since the launch of Beacon Chain that the withdrawal facility is available to users.
But despite some skepticism, the ETH price is up by more than 10% within four days of the Shapella upgrade. Speaking to CoinDesk, Greg Magadini, director of derivatives at crypto analytics firm Amberdata, said:
“The Shapella upgrade is the first time that we’re getting some life back into the Ethereum market. On Ethereum, developers have proven that they can follow through on their vision. We’ve made a major milestone and so this brings back validity and credibility to Ethereum.”
Validators Are Restaking Back Into Ethereum
Speaking to CoinTelegraph, Lachlan Feeney, chief executive of blockchain consulting and development firm Labrys, said that validators are restaking back onto the Beacon Chain. “Much of the stake that has been withdrawn over the last few days is actually going straight back into The Beacon Chain as validators are looking to compound their interest. So much so that net stake is currently increasing,” said Feeney.
In the current macro environment, many early stakers were skeptical and wanted to liquidate their staked ETH after nearly a 30-month waiting period. However, considering the mid-to-long term period, Feeney expects the amount of stake Ether to increase over a period of time. This will further strengthen the Ethereum blockchain at the consensus level. He added:
“Because Shapella is a massive de-risking event, over the medium to long-term more, not less, ETH will be staked. We anticipate that in the not too distant future, we will reach a record high of Ether being staked.”
However, note that the 1 million ETH milestone is still higher than the anticipated first-week withdrawal after the Shapella upgrade. As per estimates, only 170,00 ETH were expected to unstake in the first week. However, the numbers are almost 500% larger than this.