Ether Breaks $1,900 Resistance Level Ahead of Shanghai Fork and Staking Withdrawals Update

Ether Breaks $1,900 Resistance Level

Ether (ETH) has breached the $1,900 resistance level for the first time in over seven months and is currently trading at $1,914, a week ahead of the Ethereum Shanghai hard fork. The Shanghai hard fork, set to occur on April 12, is the next major update for the second-largest cryptocurrency by market capitalization. The hard fork will implement EIP-4895, which will allow validators and stakers to withdraw staked ETH from the beacon chain. Additionally, other EIPs aim to increase transaction speeds while reducing transaction costs.

CoinMarketCap data shows that the last time Ether was over $1,900 was on Aug. 16, 2022, during a broader crypto sell-off when the United States Federal Reserve was hiking the Federal Funds rate at a record pace to combat inflation.

The recent price increase could be driven by the expectation that the Fed may ease up on its quantitative tightening efforts as rate increases cause cracks in the global banking industry or by increased demand for Ether given that staking is slated to be more flexible.

While Bitcoin (BTC) has also recorded gains in recent days, the trading pair ETH/BTC has increased by nearly 3% in the last week according to TradingView, suggesting that both factors may be contributing to Ether’s price jump.

The Ethereum Shanghai Hard Fork Update

While Shanghai refers to the fork on the execution layer client side, Capella is the upgrade name on the consensus layer client side and is set to be executed shortly after Shanghai on April 12. The execution layer is where all the smart contracts and protocol rules are, while the consensus layer ensures that all network validators follow these rules.

It is worth noting that the price of ETH dropped sharply following the execution of The Merge on Sept. 15, 2022, where it lost just under a quarter of its value in one week according to CoinMarketCap. Despite some analysts and traders suggesting the unlocking of staked Ether will create sell pressure, what will occur following the Shanghai and Capella updates is currently speculation.

Conclusion

Ether’s recent price jump above the $1,900 resistance level is significant for the cryptocurrency, which has struggled to surpass this level in recent months. The upcoming Ethereum Shanghai hard fork, combined with increasing demand for Ether and the possibility of the Fed easing its quantitative tightening efforts, could be contributing to Ether’s recent price gains. However, it remains to be seen how the unlocking of staked Ether will impact the cryptocurrency’s price following the Shanghai and Capella updates.