How Did Ether Price Predictions Fare After Shapella Upgrade?

Validator withdrawal limits, the ability for stakers to hedge out exposure and general interest has proved to be mostly accurate in the short-term price predictions for ether

article-image

Source: Shutterstock / Overearth, modified by Blockworks

share

Ethereum’s Shapella upgrade is now just over a week old, with early network figures offering some insight into the current performance and health of the ecosystem.

Analysts who predicted Shapella would not greatly impact pricing, have been proven mostly right, though some market participants turned out to be incredibly wrong.

The network has either partially or completely distributed more than 1.3 million ETH ($2.52 billion) — a significant jump from last week’s $617 million, data shows.

Out of these withdrawals, roughly two-thirds comprise rewards that were accumulated from past validator duties, research firm K33 said in a recent analysis. Those rewards were automatically distributed. For validators fully withdrawing, there is an exit queue that limits the rate of withdrawal. That ensures the proof-of-stake network remains secure even in times of high demand to leave.

Matt Fiebach, an analyst for Blockworks Research, said just before Shapella went live, he expected there to be minimal impact on price from the $34 billion in total staked ETH becoming somewhat more liquid.

The analyst pointed to a plethora of related derivatives available that could allow ETH stakers to hedge out their exposure prior to the unlock.

Katie Talati, director of research at crypto-focused asset manager Arca, also told Blockworks at the time due to the validator withdrawal queue limits, she anticipated a minimal impact on sell-side pressure.

That coincided with statements from Rich Falk-Wallace, CEO of research platform Arcana. Assuming the maximum outflow of validators occurs, Falk-Wallace estimates that it would take more than two years for the number of validators to decrease from the current 536,000 to 100,000.

That’s not a given, however — more validators can join the network as well. Over the past 7 days, there has been a net increase in the number of validators by about 18,000. The staking yield increases when more validators leave, which should have the effect of establishing an equilibrium.

The initial impact on price was positive, with ether (ETH) briefly pushed to new heights above $2,100 — a level not seen in almost a year — on April 16. 

While a market correction threatens to undo most of this month’s run-up, predictions over short-term volatility have proven to be mostly correct.

Some traders admitted defeat on their bearish predictions for the impact of the upgrade, such as popular Twitter pundit, Kamikaz, who has now flipped “bullish.” Just days before, the pseudonymous self-proclaimed analyst had predicted a “death spiral” for the asset.

Loading Tweet..

Kamikaz had, for some time, been locked in an ongoing feud with North Rock Digital’s Hal Press over ETH’s directional bias in both the short and long term. 

Ahead of the upgrade, Press predicted in late March that ETH’s price relative to bitcoin (BTC) would reach roughly 0.08 ETH/BTC. That came incredibly close, reaching a maximum of 0.07 ETH/BTC, five days after the upgrade went live. 

ETH/BTC is a trading pair on crypto exchanges that represents the ratio of ether per bitcoin. It is used by traders and investors to speculate on the relative strength of both assets.

Press’ post-Shapella target prediction may yet be vindicated, though for now ether remains squarely in a long-term range established in May 2021, indicative of the high correlation between the top two crypto assets.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png

Research

ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.

article-image

Plus, is Polymarket this cycle’s breakthrough mainstream app?

article-image

The crypto asset manager lowered its planned fee from 0.25% to 0.15%, undercutting its competitors

article-image

Plus, a look at planned ETH ETF fees and how they differ from their BTC counterparts

article-image

North Korea suspected in breach of Indian exchange’s multisig wallet

article-image

Plus, Sanctum’s CLOUD token has officially launched — but not without problems

article-image

It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.