The price of ether climbed on Thursday, after investors put uncertainty surrounding the long-awaited Shanghai upgrade behind them.
Ether rose more than 4.5% to $1,989.02, according to Coin Metrics, while bitcoin gained more than 1%.
After a two-year lock up period, Ethereum staking withdrawals were enabled by the Shanghai upgrade around 6:30 p.m. ET on April 12.
Investors were optimistic but cautious in the weeks leading up to Shanghai, also known as “Shapella.” While many agree the upgrade is good for Ethereum in the long-term – because it allows more liquidity to ether investors and stakers which could also be a catalyst for a change in institutional participation – there was more uncertainty around how it would affect the price the week of.
Noelle Acheson, an economist and author of the “Crypto is Macro Now” newsletter said she’s skeptical the sudden move higher in ether isn’t entirely Shanghai-driven.
“It seems to be a bet on the overall liquidity outlook, but relief that Shapella did not produce a sharp drop is driving ETH’s outperformance this morning,” she told CNBC.
Many were initially concerned about potential sell pressure that might hit the market after Shanghai, because it would make locked ETH available for investors to withdraw. However, the withdrawal process doesn’t happen instantly or overnight. Plus, much of the currently staked ETH are currently at a loss, according to CryptoQuant. Investors aren’t sitting on extreme profits.
Thursday’s gains brings the year-to-date comeback for ether to 65%.
Acheson also highlighted a drop in the U.S. Dollar Index Thursday morning, which has an inverse relationship with cryptocurrencies, and a jump in crypto futures open interest.
“ETH is outperforming BTC here because it has quite a lot of catching up to do and traders, seeing that there was no adverse reaction to last night’s upgrade, are now feeling more confident about coming back in.”
Bitcoin is up 82% so far in 2023.
This article was originally published by CNBC.
