Coinbase Institutional Assesses Ethereum & Bitcoin Price Development Ahead of Shapella Upgrade

Ahead of the Ethereum Shapella Upgrade, Coinbase Institutional weighed in on the mainnet upgrade’s potential impact on Ether and Bitcoin (BTC). In a YouTube podcast, the team provided insight into whether April 12th’s much-anticipated upgrade would further spur the ongoing crypto rally. The Coinbase Institutional team also discussed the bear market scenario for Ethereum and Bitcoin post-Shapella.

According to Coinbase Institutional, BTC purchases dominated the digital currency landscape – especially in the year’s first quarter. However, the team also pointed out that Ether (ETH) purchases are gaining on Bitcoin, often outperforming the leading crypto. Coinbase Institutional explained that ETH is making a strong case in the second quarter because BTC is slightly overbought.

Coinbase Institutional Compare Ethereum, Bitcoin Rallies

Ether’s rally sees the popular altcoin range in the $1,750 to $1,850 price range ahead of the Shapella Upgrade next week. As of press time, the second-largest digital currency by market cap was changing hands at $1,880.47. Trading at a 9-month high, ETH is up roughly 6% over the past three days, with BTC being flat across the stretch.

The Coinbase Institutional team also touched on the anticipated number of initial ETH withdrawals following the upgrade. According to David Duong, Head of Institutional Research:

“There are a lot of variables here. [however], we still think that the most likely group to withdraw is going to be the [ETH] solo stakers.”

Duong added that broader withdrawals would depend on bullish or bearish market sentiment following the upgrade.

In addition to the Shapella development, the Coinbase Institutional team also covered a vast range of blockchain-related topics. These include market updates, macro & research, trade flows, decentralized finance (DeFi) & Web3.

Recent Ethereum Rally Reminiscent of September Merge Build-Up

ETH’s recent rally is typical of such price upswings leading to a major mainnet upgrade. During the protocol’s upgrade from ‘proof-of-work’ to the less energy-intensive ‘proof-of-stake’ module last September, Ether’s price also jumped. Commenting on the September’ Merge,’ which saw miners swapped out for validators, Ethereum Foundation researcher Danny Ryan said:

“Ether itself becomes a productive asset. It’s not something you might just speculate on, but it’s something that can earn returns.”

Ryan also referred to validators leveraging their existing Ether cache to verify transactions and mint new tokens as “the lowest-risk [ecosystem] return.”

Ethereum Upgrade & What It Means for Token Holders

Beginning next Wednesday, Shapella will allow Ether owners to withdraw their assets and more easily access their tokens. Until this point, ETH investors had to exchange their locked-up crypto for a token of equivalent value via third-party channels. These include centralized exchanges such as Coinbase (NASDAQ: COIN) or DeFi platforms like Lido.

Although the upcoming Shapella would unlock much of Ether’s locked assets, constituting 15% of total supply, there is one prime concern. Some analysts opine that releasing so many tokens will have a flooding effect on the market. For instance, around $2.4 billion in ETH could enter the open market, even with capped withdrawals.

Blockchain player Ilya Volkov weighed in on Shapella’s impact, saying that “A plunge is likely to happen shortly after the completion of the upgrade, as a huge amount of ETH will be unlocked, and many people will also be selling their ETH”.

However, Volkov also added that he remains bullish in the long term.

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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.