In a podcast, Coinbase’s institutional team delved into bullish and bearish scenarios for Ethereum and Bitcoin as ‘Shapella’ approaches.
Prior to the Ethereum Shapella upgrade, Coinbase Institutional weighed in on the potential impact of the mainnet upgrade on Ether and Bitcoin (BTC). in a youtube podcast, the team provided insight into whether the long-awaited update on April 12 would further spur the ongoing crypto rally. The Coinbase Institutional team also discussed the bear market scenario for Ethereum and Bitcoin post-Shapella.
According to Coinbase Institutional, BTC purchases dominated the digital currency landscape, especially in the first quarter of the year. However, the team also noted that Ether (ETH) purchases are gaining ground on Bitcoin, often outperforming the leading crypto. Coinbase Institutional explained that ETH is making a strong case in Q2 because BTC is slightly overbought.
Institutional Coinbase Compare Ethereum, Bitcoin Rallies
Ether’s rally sees the popular altcoin range in the $1,750 to $1,850 price range ahead of Shapella’s update next week. At press time, the second-largest digital currency by market cap was changing hands at $1,880.47. Trading at a 9-month high, ETH is up roughly 6% over the last three days, with BTC unchanged throughout the entire leg.
The Coinbase Institutional team also touched on the anticipated number of initial ETH withdrawals following the update. According to David Duong, Head of Institutional Research:
“There are a lot of variables here. (however), we still believe that the group most likely to retire will be individual players (ETH).”
Duong added that further withdrawals would depend on whether the market is bullish or bearish after the update.
In addition to Shapella development, Coinbase’s institutional team also covered a wide range of blockchain-related topics. These include market updates, macro and research, trade flows, decentralized finance (DeFi), and Web3.
Recent Ethereum Rally Reminiscent of September Merge Accumulation
ETH’s recent rally is typical of such price increases leading to a major mainnet upgrade. During the upgrade from the ‘proof of work’ protocol to the less power consuming ‘proof of stake’ module last September, the price of Ether also skyrocketed. Commenting on the September ‘Merger’, in which miners were exchanged for validators, Ethereum Foundation researcher Danny Ryan said:
“Ether itself becomes a productive asset. It’s not something you can speculate on, but it’s something you can profit from.”
Ryan also referred to validators leveraging their existing Ether cache to verify transactions and mint new tokens as “the lowest risk return (ecosystem).”
Ethereum Update and What It Means for Token Holders
Starting next Wednesday, Shapella will allow Ether owners to withdraw their assets and more easily access their tokens. Until then, ETH investors had to exchange their locked cryptocurrency for an equivalent security token through third-party channels. These include centralized exchanges like Coinbase (NASDAQ:COIN) or DeFi platforms like Lido.
Although the upcoming Shapella would unlock much of Ether’s locked assets, which make up 15% of the total supply, there is one main concern. Some analysts are of the opinion that the release of so many tokens will have a flood effect on the market. For example, around $2.4 billion worth of ETH could enter the open market, even with limited withdrawals.
Blockchain player Ilya Volkov weighed in on the Shapella impact, saying that “a crash is likely to happen soon after completing the upgrade, as a lot of ETH will be unlocked and a lot of people will sell their ETH as well.”
However, Volkov also added that he remains optimistic for the long term.
next
Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
