On April 13th, Ethereum’s Ether (ETH) token surpassed the $2,000 mark, hinting at a potential bullish uptrend following the highly anticipated Shapella upgrade’s launch in the network. According to Coinbase, the price of Ether rose around 4% on the same day, ignoring potential sell-off pressures generated by the upgrade.
The Shapella hard fork allows users to withdraw their ETH from Ethereum’s proof-of-stake smart contract. Since the Shanghai launch a day ago, over 98,000 ETH worth roughly $194.8 million have left Ethereum’s voting balance reserve, as per Nansen. Nearly $200 million of potential selling pressure has entered the market. However, Ether’s price rise following the Shapella upgrade suggests that the market has absorbed any selling pressure thus far. Moreover, it is likely that users have held onto their ETH staking rewards instead of selling them, expecting further gains.
Presently, around 15% of Ethereum’s total supply in circulation, roughly 120.4 million ETH, is staked. However, more than 70% of the staked ETH is still underwater compared to current price levels, as per data collected by Dune Analytics. This reduces the possibility of a short-term sell-off resulting from Shanghai’s staking withdrawals.
Overbought Ethereum Market May Face a 10% Correction
The Ethereum market’s ongoing surge has left ETH/USD slightly overbought, increasing the likelihood of a short-term price correction this month. ETH’s daily relative strength index (RSI) is two points below its overbought threshold of 70. In addition, ETH/USD tested a critical resistance level at $1,990, which has previously led to price pullbacks in May and August 2022. In case of a repeat of this scenario, there may be a correction toward the 50-day exponential moving average (50-day EMA), which is currently at $1,750 in April – down approximately 10% from the current price levels. This ETH price level is also close to the historical support/resistance line.
Alternatively, if there is a decisive breakout above $2,000 – which is a psychological resistance level – Ether’s price could start its potential climb toward $3,000.
In conclusion, readers should note that this article does not give investment advice or recommendations, and every investment and trading move involves risks. Hence, readers should conduct their own research when making a decision. However, the Shapella upgrade’s successful launch and the market’s response have raised optimism for Ethereum’s continued price growth.