The price of ether (ETH) has been resilient following the Shanghai Fork (aka Shappela) last week, Coinbase (COIN) said in a research report Friday.
The successful upgrade of the Ethereum blockchain supported better than expected ether price action, which Coinbase says could continue through the end of April. The Shanghai upgrade allows validators to withdraw staked ether and rewards that have been locked up.
Within the first twenty four hours of withdrawals being enabled, ether supply has been limited due a number of reasons, the report said.
Firstly, the “majority of addresses receiving partial withdrawals have not spent their received rewards with around 70% of addresses now having properly set their withdrawal credential prefixes to 0x01,” analysts David Duong and Brian Cubellis wrote.
Second, full withdrawals are being processed but their impact on the market has been partly offset by a “healthy number of new entrants in the validator entry queue,” the note said.
Another reason why ether is appreciating is because of ETH’s relative underperformance versus bitcoin (BTC) year-to-date, which has left a lot of room for catchup post the Shanghai upgrade, the note added.
Coinbase says because of this relative underperformance, it has seen some rotation from bitcoin into ether.
The macro environment also remains conducive to risk taking for the time being, which also may support ether’s price, the report added.
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