Ethereum value dropped, as expected, and then rose again

Yesterday the market value of ETH (Ethereum) fell as low as $2,050, as suggested by some forecasts. 

Indeed, before the Shapella update was applied, on the night of 12-13 April, the forecasts were even more pessimistic, but in those very days they turned out to be inaccurate.

The Shapella update and predictions about the value of Ethereum

The fact is that after almost two years, Shapella finally unlocked all the staked ETH on Ethereum’s new blockchain. 

It was thought that this unlocking would trigger a small rush of withdrawals, which in turn could generate a wave of selling, but instead this did not happen. 

It is worth mentioning that the actual unlocking was not really immediate. 

In fact, while it is true that all staked ETH on the blockchain were immediately unlocked, this did not necessarily apply to all those that were staked on pools such as Lido, or on exchanges such as Coinbase, Binance, and Kraken.

Indeed, excluding those who staked their ETH directly on their proprietary nodes, the four staking pools just mentioned have the highest percentages of staked ETH. 

While, for example, Kraken has already unlocked them, Binance and Lido have not yet allowed users to withdraw their staked ETH, and this is slowing down these withdrawals in general. 

On 13 April, the first day of enabled withdrawals, the overall number of ETH in staking was reduced only by a factually insignificant percentage, and only on the 15th and 16th was it reduced a bit further. 

It is worth noting that the 14th was the day when the ETH price rise stopped, so it is possible that many people waited until the end of the rise to start withdrawing.

The price trend of Ethereum

Before 12 April, the price of ETH had already risen from $1,700 in late March to $1,920. 

Given that many had expected a drop after the Shapella update, and since instead there was no such drop, the price resumed its climb the next day, to over $2,000. On 14 February it also exceeded $2,100, but then the rise stopped. 

Since then the value of Ethereum has begun to lateralize in a range between $2,050 and $2,140, and for now it does not seem to want to break out of this range. 

Yesterday, however, before the opening of US exchanges, it seemed to be on a sharp decline, but it did not go below $2,060 except for a very brief moment. 

The US exchanges opened in the negative, but then later in the day reversed course. 

However, with the US stock exchanges closed, the price of ETH, after returning above $2,080, fell again for a brief moment below $2,060, but then began a new climb back up to above $2,100. 

As one can well understand from this data, it is oscillating within a very compressed range, with decidedly little volatility compared to what it has shown in the past. 

It is entirely possible that this period of compressed lateralization will sooner rather than later cease, leaving room for rises and falls of greater amplitude.

The short/medium and long-term outlook

Against such a backdrop, it is not surprising that the bearish forecasts that circulated before Shapella have not yet been entirely swept away. 

On the contrary, there are several analysts who simply speculate that the downward reaction to the update has merely been postponed for a few days, due to the fact that its consequences are not immediate. 

In other words, instead of a decline on the short or very short term, they are assuming a decline on the medium/short term, occurring after a further increase. 

It must be said that compared to the beginning of March, when the price of ETH was just over $1,500, the growth was 40%, and it occurred basically in three moments. 

One in mid-March, a month before Shapella, following the rise in Bitcoin’s price. 

A second in early April, probably due to expectations of the update, but smaller in magnitude. 

The third after 12 April, probably due to the fact that the long-awaited post-update drop did not occur. 

After such a parabola, it is more than normal that there could be a significant retracement, but this could only impact the short, or at most the medium/short term. 

Conversely, what will happen in the medium/long term is yet to be imagined.