For the first time since Sept. 12, Ethereum surged above $1700 before recoiling back to $1640, at press time. The second biggest crypto by market cap kickstarted 2023 on an impressive note, with a 40% rise to date.
Following the FTX saga and the prolonged bear market of 2022, the leading altcoin has been able to recoup the losses suffered during the events in just a span of 30 days.
Also, since the beginning of February, ETH has experienced the highest percentage of profitable transactions in the previous two years.
Investors are unsure whether the price rally would continue its momentum even as profit-taking has increased, Santiment noted.
For one, Ethereum repeatedly failed to overcome the $1,680 resistance and the accompanying negative news circulation might bear the ability to destroy the bullish triangle pattern.
Investors are opting for defensive positioning ahead of the upcoming Shanghai upgrade.
Ethereum’s highly anticipated hard fork, which is expected to launch in March, will allow the withdrawals of over 17 million ETH staked or deposited in the Beacon Chain since Dec 2020.
Only 43,200 ETH can be unstaked each day, even though the 17.26 million total staking amount cannot be removed on the day of the update.
Ethereum’s Shanghai Fork Might Trigger Sell-Offs
However, the total staking reward of the past two years, which amounts to roughly 1 million ETH, can be withdrawn instantly.
Since the entire stack is now withdrawable, holders may rush to exchanges to sell their ETH as soon as the floodgates open, potentially driving down the price. This has raised concerns among traders.
On the positive side of things, a developer for the Ethereum Foundation announced the launch of “Zhejiang” public testnet on February 1.
In order to help validators prepare for the Shanghai hard fork, the implementation will permit staked Ether withdrawal in a test environment.
Additionally. it would replace the Shandong testnet because when the latter was launched, it included several EIPs that will not be rolled out with the upgrade.
The Zhejiang testnet, in the opinion of one ETH developer named Paritosh, is a good opportunity for all users to test out how they intend to gather, present, and use the withdrawal information.