Shanghai, an important upgrade to the Ethereum blockchain, has been a success. Against the backdrop of the news, the ETHUSD rate rose by 10% per day, breaking the psychological level of $2,000. As of Friday morning, ETH is trading above $2,100, something that has not happened since May 2022. Since the beginning of the year, ETHUSD has risen in price by about 77% (for comparison, Bitcoin, by about 86%).
In the long run, the Shanghai (also known as Shapella) upgrade has the advantage of providing more freedom to invest. But in the short term, a collapse in the value of ETH could occur, as investors got the opportunity to withdraw funds from staking. According to on-chain metrics, after the update, more than 1 million ETH tokens were requested for withdrawal. “[This] is much lower than what was previously expected,” Matt Maximo, an analyst with Grayscale, told CNBC.
The growth of the ETHUSD rate was also facilitated by the lower US dollar index — it fell to the lows of the current year after the release of March producer price index on Thursday, which showed signs of weakening inflation.
On the daily chart of ETHUSD, there was a bullish breakout (1) of the upper boundary of the rising channel that was active in 2023 – which suggests that the market is overbought, and a technical pullback with a breakout test of the $2k psychological level will be a likely scenario.