Bitcoin Slips Under $30K, Ether Staking Tokens Take a Beating Ahead of Shapella Upgrade

Traders are likely taking profits ahead of Wednesday’s CPI report and Ethereum’s Shapella upgrade.

AccessTimeIconApr 12, 2023 at 6:21 a.m. UTC
Updated Apr 12, 2023 at 2:21 p.m. UTC

Bitcoin (BTC) slipped under the crucial $30,000 level in early European hours on Wednesday, with overall market capitalization falling 1.2% in the past 24 hours.

Ether (ETH) traded just over $1,860, leading the drop among major tokens. Solana's SOL remained in the green, while BNB, Cardano's ADA and XRP gave up gains from Monday night.

The so-called Liquid Staking tokens slumped. Lido’s LDO governance tokens fell as much as 10%, while Rocket Pool’s RPL dropped 8%. Both protocols lock billions of dollars to provide yields on ether staking to users, who can stake any amount of ether to earn rewards without requiring to put up 32 ether to run a validator node.

Wednesday morning's drop caused over 96% in longs, or bets on rising prices, to be liquidated since early Asian hours, data shows.

Traders likely took profits ahead of two key developments scheduled for Wednesday: The U.S. Consumer Price Index (CPI) for March, and the much-awaited Shapella upgrade for the Ethereum network.

The U.S. Federal Reserve is still concerned about sticky inflation, and softer inflation data may allow the Fed to go for a 25 basis points rate hike at the Federal Open Market Committee meeting on May 2 – which could buoy traditional markets and riskier assets such as bitcoin.

On the other hand, Shappella – a portmanteau of Shanghai and Capella, two major Ethereum network upgrades that are expected to occur simultaneously on April 12 – will allow investors to withdraw their ether staked on the Ethereum blockchain. Staked ether cannot be withdrawn or freely traded currently.

As such, some say the event could prove bullish for ether as staking and capturing yields directly from the blockchain becomes more accessible to users.

“Allowing withdrawals, boosted by the recent popularity of liquid staking platforms, will make ETH staking much more accessible to retail investors who were previously unwilling to stake ETH for an undetermined amount of time,” said Chen Zhuling, CEO at staking service RockX, in a note to CoinDesk earlier this week.

For now, however, traders seem to risking off.

Edited by Parikshit Mishra.

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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.