Ether's dominance rate remains stagnant between 19% and 20%. That compares with a rise to 21% from 14% in the weeks before a software upgrade last September known as the Merge. That technological overhaul replaced Ethereum's at-the-time energy-intensive proof-of-work mechanism of verifying transactions with a proof-of-stake system and set the stage for Shanghai. Staking involves depositing coins in the blockchain to boost the network's security and verify transactions in return for rewards.

Investor caution in pricing ether ahead of Shanghai stems from several factors, including concerns tokens unlocked after the upgrade will flood the market and regulatory issues.

"The Shanghai upgrade will unlock over 18 million ether staked since late 2020. The market is worried that the unlocking may bring about a sell-off, causing uncertainty in the market," Griffin Ardern, a volatility trader at crypto asset-management firm Blofin, told CoinDesk.

Eoin Treacy's view

Ethereum has been lagging bitcoin for the last couple of months as traders price in the risk of additional supply coming back onto the market. However, that does not explain why bitcoin is breaking out to new recovery highs.
Bitcoin is a liquidity barometer. Therefore, the only reasonable explanation is traders have concluded the floor for inflation is now somewhere between 3% and 4% rather than aspiring to a rate below 2%. That is the corollary of thinking the peak of the interest rate hiking cycle is at hand.

If this is the extent of hiking and rates will soon decline, the logical outcome is the dollar will lose significant purchasing power over the course of the next several years. Limited supply assets should improve in value. Bitcoin is a year out from the next halvening, so the limited supply argument is going to be burnished over the coming 12 months.


Riot Platforms and MicroStrategy have both just completed base formations.