- Ethereum network’s major upgrade Shapella is slated to occur on Wednesday as the altcoin makes strides towards its $2,000 target.
- Analysts speculate likely issues surrounding the upgrade, including challenges faced by nodes returning user funds.
- Ethereum whales are accumulating Liquid Staking tokens like LDO ahead of the upgrade, likely front-running the upgrade.
Ethereum (ETH) blockchain’s Shapella upgrade is on track and set to go live on Wednesday, April 12. ETH price tackled resistance at the $1,900 level, eyeing the $2,000 bullish target.
Bloomberg analysts evaluated the likely issues surrounding the issuance of user funds by nodes on the Ethereum network.
Ethereum price inches closer to $2,000
Ethereum price crossed key resistance at the $1,900 level despite the rising uncertainty of token unlock. ETH hit a 24-hour high of $1,936 before its recent pullback. Analysts evaluated the Ethereum price chart and noted there is virtually no resistance between the $2,000 and $2,500 levels.
@CryptoJelleNL, a technical expert, predicts a run up to $2,500 once Ethereum price crosses the resistance at $2,000.
ETH/USDT price chart
$1,821 and $1,882 are two key levels for Ethereum’s uptrend. In the event of a correction, ETH price could be nosedive to these two levels. A sustained break above the $1,944 level could send the altcoin to its $2,000 target, according to crypto analyst Justin Bennett. The $1,944 level has acted as key resistance for the altcoin.
Analysts at Bloomberg believe Ethereum is likely to face selling pressure with the token unlock. Experts identified the challenges that nodes in the network are likely to face in returning user funds post ETH unlock.
Ethereum at risk of “turbulence”
Token unlock is available for stakers of the ETH2 deposit contract for the first time since 2020. This makes it a key event for the altcoin, in the Shapella upgrade. What’s more, Ethereum holders need to brace for “turbulence” from technical challenges faced by nodes and validators participating in token unlock.
The Shapella upgrade was tested smoothly on the Goerli testnet, however it remains to be seen how the roll-out on the Ethereum mainnet turns out. There is a risk of nodes facing challenges that take time to resolve, adding to the uncertainty surrounding the upgrade.
Ethereum network’s large wallet investors have continued accumulation of Liquid Staking tokens ahead of the upgrade.
Ethereum holders de-risk ahead of Shapella upgrade
The ETH/BTC ratio implies that holders have de-risked ahead of the Shapella upgrade. ETH/BTC recently hit new Year-to-Date (YTD) lows post the upgrade’s successful deployment on the Goerli testnet. It is therefore likely that Ethereum’s community of holders have priced in the expectation of a negative impact on ETH from token unlock.
ETH/BTC 1D price chart
Why Ethereum whales are scooping up LDO
The Liquid Staking tokens narrative gained relevance with Ethereum whales scooping up tokens like Lido Finance’s LDO. This implies large wallet investors are likely front-running the upgrade and scooping up tokens of Liquid Staking protocols in anticipation of a rally, ahead of Shapella.
1/ The #Ethereum #Shanghai upgrade is coming, are whales/SmartMoneys buying or selling #LSD tokens?— Lookonchain (@lookonchain) April 10, 2023
We analyzed the tokens of the 3 protocols with the most TVL.$LDO $RPL $FXS pic.twitter.com/cm5TwXj0zc
The behavior of Ethereum whales is a bullish sign for the asset in the short-term.
Liquid Staking Derivates v. DeFi: Ethereum rat race
Post the successful completion of the Shapella Upgrade, ETH tokens that are subsequently unlocked from the Beacon Chain will enter circulation. At this point, the ETH community and holders are likely to give topmost priority to security when deciding between liquid staking platforms available on the market. Following security, rewards and the ease of staking/ unstaking may take center stage when ETH holders determine where to stake their holdings.
While Liquid Staking Derivatives tokens and DeFi protocol tokens compete for the Ethereum tokens that are being unlocked, it remains to be seen whether the upgrade is priced in or there is room for further price rally in tokens like LDO.
Chen Zhuling, Founder and CEO of RockX, a blockchain node network was quoted as saying:
At this stage, it's difficult for anyone to say whether liquid staking tokens have priced-in the Shapella Upgrade. However, seeing as major platforms have been performing consistently across the board, it's reasonable to assume that they will continue to do so barring any big industry developments. For instance, across 2023 thus far, the top LSD tokens have posted up to 150% in gains compared to Ethereum's near-65%.
The community sees promise in liquid staking and it emerged as the second-largest crypto sector with over $14.1 billion in total value locked, signaling its relevance in the crypto ecosystem.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.