The price of Ethereum’s Ether (ETH) token surged to $2,000 a day after the release of the long-awaited Shapella upgrade to the network.
Ethereum dodges fears of selling the news
On April 13, the price of Ether gained about 4% to hit an intraday high of $1,996 on Coinbase, ignoring the the potential selling pressure that the Shapella update could bring to the market.
In short: The Shanghai hard fork, also known as “Shapella”, allows users to withdraw their ETH from the Ethereum proof-of-stake smart contract.
As of 9:00am UTC on April 13, more than 98,000 ETH with a value of around $194.8 million have flown out of Ethereum’s voting balance reserves since the launch in Shanghai a day ago. according to Nansen. In other words, almost $200 million in potential selling pressure has entered the market.
But the rise in the price of Ether from Shanghai suggests that the market has had no problem absorbing the selling pressure arising from this event so far. It is also possible that most users have decided to keep their ETH staking rewards rather than sell them in anticipation of higher profits.
Around 15% of the total supply of Ethereum in circulation, almost 120.4 million ETH, is currently up for grabs.
Interestingly, more than 70% of the ETH staked is still underwater compared to current price levels. according to data collected by Dune Analytics. This reduces the possibility of a short-term sell-off due to Shanghai withdrawals.
Ethereum Price Risks a 10% Correction
The ongoing rise in the Ethereum market has left ETH/USD slightly overbought, raising the likelihood of a near-term price correction this month.
Related: When the Levees Break, Liquidity Flows: Ethereum Shapella Analysis and Liquidity Participation Derivatives
Notably, ETH’s daily Relative Strength Index (RSI) is just two points below its overbought threshold of 70. Additionally, ETH/USD tested a critical resistance level near $1,990, which preceded pullbacks from prices in May and August 2022.
A repeat of this scenario likely means a correction towards its 50-day exponential moving average (50-day EMA; the red wave) near $1,750 in April, 10% below current price levels. This ETH price level is also close to the historical support/resistance line.
Conversely, a decisive break above $2,000 (a psychological resistance level) could see Ether price begin its potential climb towards $3,000.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
