Ethereum is an open-source decentralized blockchain with smart contract functionality. The platform is powered by its own native ether(ETH) which is currently second in market capitalization after its rival, Bitcoin. Since its inception in 2013 by Vitalik Buterin, the chain powers digital money, global payments and decentralized applications. The platform has built a booming digital economy with bold and better ways for creators to earn online from anywhere as long as they have access to the internet.
The Ethereum blockchain has recently made a major upgrade to their network in 3 years. The upgrade, dabbed Shapella Upgrade has effected major changes to the network including the ability of users to withdraw their staked ETH. Following this upgrade, ETH has surged above $2 100 for the first time since May of 2022. The upgrade that was implemented on Wednesday means that staked ETH can be withdrawn from staking smart contract, a first since staking was enabled in the Beacon Blockchain in December of 2020.
However, prior to the update, some experts had expressed their worries that enabling of withdrawals could lead to a rise in short-lived sell pressure in the ETH market. This was attributed to the fact that staking users were looking to cash in on their accrued yields as well as the ETH price appreciation since December of 2020. Since that time, the price of ETH has appreciated by around 200%.
The ETH market has however, seen an opposite trend than what was predicted before Shapella upgrade. Instead, on-chain data from Thursday has revealed that the number of staked ETH tokens had jumped by 100 000. This Jump is the largest one-day increase in a period of 2 months. This rise indicates that a larger proportion of ETH investors have opted to stake their ETH tokens as the Shapella upgrade gives them the ability to withdraw their tokens rather than withdraw their staked ETH.
The effect of locking more staked ETH tokens is the creation of scarcity in unstaked ETH tokens that can be traded across cryptocurrency exchanges therefore, arguably boosting the price of ETH. This has been the case in the recent market moves involving the ETH token. This could also stem from the fact that there has not been a flood of unstaked ETH therefore reducing the selling pressure.
As of Thursday, the amount of locked and staked ETH stands at 18.25 million and now that staking withdrawals have been enabled, more crypto investors are likely to put their ETH tokens in staking contracts and earn from the yield. As the will for staking ETH rises, investors from liquid staking protocols are likely to see yields between 4% and 5%. The current staked ETH amount only accounts for 15% of the total ETH supply that stands at around 120 million.
As US inflation continues falling and the subsequent improvement in macro conditions, ETH price is primed to continue growing in a positive trajectory in the coming few weeks. ETH price has established resistance around the $2 100 region and this could jump to the very important $3 000 region as all variables indicate the return of the bull market.
