Shapella Launches Ethereum Higher
Diving into Ethereum’s upgrade and what does it mean for the network
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This week we dive into Ethereum’s successful upgrade and resulting price rally. Surpassing $2k for the first time in 11 months, ETH’s upgrade appears to have confirmed a “bullish unlock” outcome as we first explored in the ITB newsletter back in January.
Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether.
- Ethereum fees cooled down, with the Shapella upgrade going smoothly without major spikes in activity
- Bitcoin fees dropped to a one-month low
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
- Both Bitcoin and ETH recorded relatively modest inflows into CEXs
Shapella Launches Ethereum Higher
The Shanghai Upgrade of Ethereum has been successfully implemented, marking the beginning of a new period for staking withdrawals. The upgrade incorporates modifications to the execution layer Shanghai upgrade, consensus layer Capella upgrade, and Engine API. The execution layer’s Shanghai upgrade is a noteworthy achievement in Ethereum’s plan. It allows stakers to withdraw both their staked ETH and any earned staking rewards.
Enabling users to withdraw staked assets not only simplifies the process but is also anticipated to appeal to more prudent users. As of now some of the most relevant metrics to the Shanghai fork can be seen below:
- In the past 24h there has been a total of 104,000 ETH deposited into the staking.
- Accounting withdrawals of the past 24h the net balance is of -79,834 ETH.
- Furthermore, 868,631 ETH are currently in queue in order to be processed for a withdrawal.
- 17,389,640 ETH are currently active validating the network; there is a total of 19,089,267 ETH on the Beacon Chain with rewards included.
- Lido is the leading institution engaged in staking, with others categorized as independent stakers coming in second place, followed by Coinbase, Kraken, and Binance respectively.
- 63.3% of the ETH waiting to be withdrawn by entities belongs to Kraken.
Moreover, validators that presented 0x01 credentials are the only ones authorized to handle full and partial withdrawals. By using this logic and monitoring the count of validators that changed into 0x01 credentials enables users to predict the amount of validators willing to withdraw in the near future.
- 63.7% have updated to 0x01 withdrawal address
- 36.3% have not updated so they can’t be considered for withdrawals yet
The successful implementation of this upgrade has likely boosted investor confidence in Ethereum’s future prospects, leading to increased demand and higher prices for ETH.
- ETH prices exceeded the $2000 threshold, a level not achieved since May of 2022.
- Over the last week, the 30-day correlation between the Nasdaq 100 and ETH declined from 0.88 to 0.64.
As a result of the recent price surge, 71% of addresses are now holding profitable positions.
- According to the In/Out of the Money Around Price indicator, the next significant level at which a large number of addresses have traded lies within the range of $2365 to $2430.
In conclusion, the next major upgrade on the horizon for Ethereum is EIP 4844 (referred to as Proto-danksharding). This update promises to address two critical issues for the network: improving transaction speed and reducing transaction costs. These are essential challenges that must be tackled to achieve scalability and enable Ethereum to handle a higher volume of transactions. As the network continues to evolve, these upgrades will play a significant role in enhancing the overall functionality and usability of the Ethereum blockchain.
