The successful upgrade supported better-than-expected ether price action, which Coinbase says could continue through the end of April. The upgrade allows validators to withdraw staked ether that have been locked up and to claim rewards.
Within the first 24 hours of withdrawals being enabled, ether's supply has been limited for a few reasons, the report said.
First, the “majority of addresses receiving partial withdrawals have not spent their received rewards with around 70% of addresses now having properly set their withdrawal credential prefixes to 0x01,” analysts David Duong and Brian Cubellis wrote.
Second, full withdrawals are being processed, but their impact on the market has been partly offset by a “healthy number of new entrants in the validator entry queue,” the note said.
Another reason is ether's relative underperformance compared with bitcoin (BTC) year to date, which has left a lot of room for catchup after the Shanghai upgrade, the note added.
Coinbase says because of this relative underperformance, it has seen some rotation from bitcoin into ether.
The macro environment also remains conducive to risk taking for the time being, which also may support ether’s price, the report added.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.