The value of Ether spiked in the first week of April 2023. This broke a nine-month record. This is before a huge network upgrade is set to come into effect. Predictions say that it will make this cryptocurrency a better long-term investment.
This year, Bitcoin has been outperforming Ether. But recent gains served to bridge the divide. Ether has shot up almost 60% in 2023, closing the gap on Bitcoin’s gain of 70%. There are almost 20 million staked Ether tokens worth more than US$30 billion. Nearly 20% of Ether’s total supply is now seen as locked assets.
Ether’s recent recovery follows a pattern. It compares to previous surges of enthusiasm when network upgrades are scheduled. In September 2022, Ethereum once again rose in value. This was before its historic changeover to Proof-of-Stake. This was a method of securing the network that was more efficient energy-wise.
Before, a massive, global miner network validated transactions with specialised computers processing mathematical equations. After the Merge update at the end of last year, Ethereum began working on the Proof-of-Stake system. This traded validators for miners and the need for massive computer banks working all the time was removed. Validators instead leveraged their existing Ether caches. This allowed them to both mint new tokens and verify current transactions.
Danny Ryan is an Ethereum Foundation Researcher. He spoke of the cryptocurrency itself turning into a productive asset. This was after the September 2022 upgrade. He said that it’s no longer an item that investors could only speculate on. It has transformed into one capable of earning returns. Ether’s taking on attributes of more traditional financial assets that pay the holder’s interest.
Ryan added that Ether has the lowest risk-return within Ethereum’s ecosystem. He added that other yields involve counterparty risks like smart contracts.
As of Wednesday, April 12, the blockchain will once again upgrade. Shapella, its moniker, will permit Ether owners to withdraw assets when they want to. Before now, centralised exchanges or decentralised finance protocols were necessary. This is how one exchanged locked Ether tokens for those of the same value.
Shapella is set to unlock much of this value. This is because it gives more control over the assets they’re holding. But the market flooding is a concern too. So many tokens releasing could see them undergo significant devaluation, even if there’s a cap on withdrawals. K33 research has estimated that Ether worth over US$2 billion may soon hit the open market.
The completion of the Shapella upgrade could unlock enormous amounts of ETH. If this happens, a rise in sales thereof is likely as well. Being able to withdraw and deposit tokens may encourage more people to stake Ether. If staked money proves easy to take out, a boost in capital onto the network is predicted.
Suggestions indicate that the price of Ethereum may soon exceed US$2 000. But this can only happen if avoiding a sell-off frenzy.
