Cryptos Ethereum Network Completes Key Software Update Without a Hitch

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(Bloomberg) – Ether surged above $2,000 for the first time since August after a widely anticipated software upgrade to the most commercially important blockchain went as planned, and concerns over releases initial rapids proved to be unfounded.

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The so-called Shanghai Update, or Shapella, allows investors to line up to withdraw Ether coins they promised to help mine the Ethereum network in exchange for rewards, a process called staking. And so far, 96% of withdrawal volume comes from users withdrawing their rewards instead of their entire stakes, according to researcher Flipside Crypto.

Ether jumped as much as 6% to hit $2,023 on Thursday, taking it to levels not seen since May 2022. Its 68% year-to-date gain still lags the 84% gain of Bitcoins. But there could be an added benefit if the size of withdrawals in the now two-week-long queue, according to Rated Network Explorer, remains muted.

It could still be volatile, said Noelle Acheson, author of the Crypto Is Macro Now newsletter. There is a queue for ETH withdrawals, and impending selling pressure from Kraken, Celsius and others that need to exit, but the overall liquidity situation is favorable for crypto assets.

Crypto exchange Kraken, which is ceasing product staking in the US as part of a settlement with the US Securities and Exchange Commission, topped the initial exit queue, based on the figures compiled by Rated.

But overall, the amount of Ether entering the market from Shanghai pullbacks is much lower than previously expected, said Matt Maximo, an analyst at Grayscale Research. The amount of new ETH being staked also exceeds withdrawals, creating additional buying pressure to offset the withdrawn ETH.

The story continues

According to researcher Coin Metrics, around 1.2 million Ether tokens worth around $2.3 billion at current prices are expected to be withdrawn over the next five days. However, this only represents 6% of the approximately $36.7 billion of Ether locked up for staking, according to data from Staking Rewards.

Investors had been prepared for the swings in crypto prices around the upgrade, but so far digital asset markets have been largely flat.

Smaller coins from apps that try to make it easier to mine Ether staking rewards, such as Lido and Rocket Pool, have advanced, according to data from CoinGecko. The LDO climbed 7.2% and the RPL 11%, according to the data.

The Ethereum blockchain in September last year transitioned to proof-of-stake from a proof-of-work approach, an overhaul called merge that reduced the networks’ electricity consumption.

Proof of Stake uses stacks of Ether placed in special so-called staking wallets to help order transactions on the Ethereum network. And with investors now able to withdraw staked funds, adding to the appeal of an Ether investment, there is heated debate over whether Ethereum could one day replace Bitcoin as the largest digital currency in the world. world.

Ethereum is updating and navigating with great skill so far and solidifying its position as the No. 2 crypto, said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. The network is moving into the future much faster than Bitcoin.

–With help from Sidhartha Shukla and Carly Wanna.

(Updates price reactions and adds comment to fourth paragraph.)

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