Ether, the world’s second-largest cryptocurrency, just reached a nine-month high this week.
The recent surge comes just ahead of a major network upgrade, known as “Shapella” that some crypto enthusiasts predict will make it a more profitable long-term investment.
Over the past three days, $ETH broke the $1,900 margin, growing by about 6% in that period. To put it in comparison, the market-leading asset, Bitcoin, mostly traded sideways during the same time span.
The most significant update to the blockchain since “the merge”, Shapella will allow holders to withdraw their assets beginning next Wednesday. The new feature will end the need for centralized exchanges or DeFi protocols to exchange their locked-up ether for a token of equivalent value.
Ethereum Upgrades Generally Mean Good Things For $ETH
This week’s rally shares a lot of similarities to the price action seen in the weeks before the merge.
Back in September 2022, the second-largest crypto went through one of the most historic events in the market’s history — when it completely abandoned mining in order to adopt staking, a faster and more sustainable consensus mechanism.
The new upgrade eventually became one of the targets of the SEC, who started claiming that Ethereum had become a security, due to the similarities between staking rewards and dividend payouts from stocks.
But since then, over 18 million tokens ($32.5 billion) were staked, meaning that 15% of ether’s total supply is considered locked assets.
The Shapella upgrade will give holders the ability to access these locked assets, giving the community a lot more control over the blockchain.
However, this freedom could also come at a cost. Many believe that the sudden unlocking of billions worth of Ether could flood the blockchain. With that in mind, the developers are also implementing a limit to daily withdrawals.
Overall, the ability to freely stake and withdraw tokens at will could incentivize investors to keep more Ethereum in the long run.
