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Why is Ethereum (ETH) price up today?

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Ethereum (ETH) is witnessing a price breakout on the back of the successful Shanghai and Capella (Shapella) upgrades. The increased bullish sentiment after the upgrade led Ether price to hit a year-to-date high of $2,123 on April 14.

Ether price and sentiment dashboard. Source: Cointelegraph Markets Pro

The Ethereum decentralized finance (DeFi) ecosystem received more daily fees, growing 30% in 24-hours on April 14 in tandem with Ether’s price growth. With the increase in Ether fees, the Ethereum proof of stake (PoS) token economics have turned deflationary and revenue is up 32% in the past 24-hours. 

Ethereum network fees and revenue. Source: TokenTerminal

Although the Ethereum network is showing positive momentum, regulators are trending toward taking swift action against the crypto sector. Debates on whether Ether is a security token under the Howey test continue combined with privacy concerns that an Ethereum researcher says staking reveals IP addresses. 

Let’s review a few of the reasons for Ether’s newfound strength.

Ethereum Shanghai was a success

The long-awaited Shapella upgrade was officially executed to mainnet on April 12.

The Shapella hardfork was first slated to commence on March 14. At the time, on-chain data suggested the Shanghai hard fork would not bring massive sell pressure, yet some analysts believed the newly unlocked supply would hinder Ether price.

The current trend post-Shapella unlock shows that a majority of validators are withdrawing only staking rewards, rather than the 32 Ether needed to continue running a node. By April 14, the amount of staked Ether only decreased by 0.2%.

Staked Ether dashboard. Source: Nansen

Ether deposits spiked after the hardfork

Despite cumulative withdrawals outweighing Ethereum ecosystem deposits, 97,040 Ether has been staked in the previous 24-hours on April 14. The uptick in Ether staking deposits is a positive sign for the future of Ethereum post-Shapella. 

Ethereum post-merge deposits and withdrawals. Source: Nansen

On April 13, more than 70% of Ether stakers were underwater. After withdrawals and new depositors, the current Ether average staked price is $2,136. The gap reduction between the average staked price to the current Ether is closing, meaning that potentially soon a majority of Ethereum ecosystem stakers may be in profit. 

Related: US enforcement agencies are turning up the heat on crypto-related crime

Ether price rises alongside the wider crypto market rally

Post-Shapella price action for Bitcoin (BTC), Ether and altcoins have led some analysts to declare the bottom is in. Bitcoin price set a year-to-date high of $31,014 on April 14, surpassing the psychologically important $31,000 level. 

While both Bitcoin and Ether price are up, Ether is gaining dominance versus Bitcoin and altcoins. Starting April 13, Ether increased its dominance to 19.37%, a 0.54% increase in 24-hours.

BTC and Ether dominance chart. Source: BTCTools

Ethereum’s dominance versus Bitcoin struggled to start 2023 but is quickly closing the gap. 

Investors’ 2023 expectations for Ethereum and the crypto market

Some analysts believe that although the Consumer Price Index (CPI) and Producer Price Inflation (PPI) prints show inflation slowing faster than expected but an Ether price dip in the near future is still possible. The highly regarded FedWatch tool still expected the Federal Reserve to raise interest rates at the May 3 Fed meeting.

Interest rate predictions. Source: CME

Macro factors like inflation-caused interest rate hikes and potential U.S. industry crackdown will continue weighing on Ether’s price slightly hindering short-term price growth potential. Factors such as positive regulatory clarity and an easing of interest rate hikes may prove to be long-term catalysts for price growth. Ether’s price volatility is likely to continue.