- Ethereum has risen above $2000 for the first time since August after the Shapella upgrade.
- Holders of the token have made withdrawals, mostly from Kraken, with most of them staking or switching between exchanges.
- Kraken suffers the most withdrawal courtesy of the SEC’s statement that its offerings were unregistered securities.
After more than eight months, Ethereum(ETH) has finally crossed the $2000 price point a day after the long-awaited Shapella upgrade.
The Shapella upgrade incorporates updates to Ethereum’s Engine API, consensus layer(Capella updates), and execution layer (Shanghai upgrade), enabling stakers to withdraw all their staked ETH, which had been locked on the Beacon chain since December 2020 when ETH was below $400 along with any accrued staking rewards.
As a result, many feared that there would be an increased supply of ETH in the market, causing it to fall in price, but that was not the case. Instead, the cost of ETH rose steadily despite all the withdrawals.
Since the update on April 12, ETH worth a total of $2.15 billion has been withdrawn. The withdrawals peaked at around 1 million tokens at the end of this past weekend. Regardless, ETH grew in price and reached an eleven-month high of $2,137.45.
Unlike most expected, selling has been moderate as most customers have chosen to stake their ETH or transfer it to other exchanges to benefit from other market opportunities rather than selling it for USD or stablecoins.
While some feared the effect the upgrade would have, others thought it would have little to no effect. On April 12, Glassnode, the crypto analytics company, forecasted that after Shapella launches, just about 1% of staked ETH may be sold on the market.
The company further stated that only 253 depositors have registered to withdraw their staked ETH positions, adding that the most recent network update won’t have a “dramatic” impact on Ether’s pricing.
However, based on the live Beacon chain report, 12,859 ETH were unlocked in 4,333 withdrawals within the first hour of the update. Additionally, over 1 million ETH had been distributed at the time of writing.
It also appeared that Kraken was the source of most of the withdrawals. Recent statistics show that the exchange constituted 62% of the exit queue, with over 15,000 validators lined up at the exit on the first day.
The exchange’s dominance in the unstaking sector was anticipated after the Securities and Exchange Commission (SEC) determined that Kraken’s staking offerings were unregistered securities back in February 2023.
Yield-Bearing Collateral
The upgrade has caused a wave of celebration among the Ethereum community led byVitalik Buterin, the co-founder of Ethereum. During a live stream, Vitalik stated that the cryptocurrency is now at a “perfect place,” adding that even if there is a lot more work to be done, it can be done gradually.
Others praised the performance of the asset seeing as many were withdrawing, but few were sold. One Twitter user stated that this results from investors realizing that Ethereum (ETH) is a yield-bearing collateral that doesn’t need to be sold to profit from its holders.
In addition, cryptocurrency exchanges have also embraced the unstaking of ETH by owners. As such, withdrawals have been ongoing on exchanges such as Coinbase and BitGo, whereas Binance said that starting on April 19, it will accept withdrawals. On April 11, Kraken began withdrawing validators for US users, and processing commenced as soon as the Shapella upgrade was implemented.
