Updated: Jun 8
- Why was ETH Pumping 🚀
- ETH Price Timeline: 13 April - 21 April
- On-Chain Analysis
- What caused ETH price to spike?
WHY WAS ETH PUMPING 😱
The majority of the crypto community expected a huge dip in Eth price post withdrawals. As usual, the crypto market remains unpredictable. Despite the On-chain data pointing to the influx of potential sell pressure, Ether's price was rising.
SHANGHAI UPGRADE DETAILS
Ever Since Beacon Chain went live in December 2020, there has been a negative sentiment surrounding Ethereum's staking mechanism: the staked ETH will be locked forever and Ethereum will never transition to Proof of Stake. These were the harsh criticism that the Ethereum community was facing. The Merge was a huge success that ended up silencing all the critics for some time. Until they moved on to criticize Withdrawals that the Ethereum Foundation will never ship the Shanghai hard fork and Withdrawals will never be made available for stakers. Critics were spreading unnecessary FUD in the media. On 12 April 2023 at 22:27:25 UTC Shanghai Hard fork was seamlessly executed. The news of the Seamless execution of the hard fork caused ETH's price to rally.
13 APRIL - 21 APRIL: DURATION FOR ETH TO RETURN TO PRE-SHANGHAI PRICE
Inflow of ETH
ETH being staked in Beacon chain's Deposit contract
Outflow of ETH
ETH being withdrawn from Beacon Chain's
Net Inflow= Inflow - outflow
ETH Post-Shanghai Peak
Successful execution of Beacon Chain withdrawals caused the Ether price to rally up by 11.3%. Ether's price peaked at 2133 USD post Shanghai Upgrade.
Driving force behind ETH's price performance
More Ether was being burned than issued. This EIP-1559 Burning mechanism made eth more scarce. The lesser the supply the higher the demand. Negative issuance, network upgrade via hard fork and external factors contributed to this sudden surge in ETH price. In conclusion, the Shanghai hard fork alone was not the driving factor behind this price action.