Crypto News

Shanghai upgrade sparks concerns as Bitcoin dominance persists

Published by
Nonhlanhla P Dube
  • Ethereum’s highly anticipated Shanghai-Capella upgrade will occur on Wednesday, allowing users access to $31 billion worth of ether staked in the blockchain since December 2020.
  • Bitcoin’s dominance rate rose to 48.5% on Tuesday, the highest since July 2021, while Ethereum’s dominance rate remains stagnant between 19% and 20%.
  • Concerns have been raised among investors about the potential sell-off of unlocked tokens following the upgrade, but analysts believe the selling pressure is unlikely to be significant.

Ethereum’s much-awaited Shanghai upgrade, also known as the Shanghai-Capella hard fork, is scheduled to take place on Wednesday. The upgrade will provide access to over $31 billion worth of ether (ETH) staked in the blockchain since December 2020. Although the upgrade is seen as bullish for Ethereum’s native token in the long term, investors are concerned about the potential sell-off of unlocked tokens following the upgrade, especially with Bitcoin’s dominance rate increasing.

Bitcoin’s dominance rate, which measures the largest cryptocurrency’s share of crypto’s total market valuation, rose to 48.5% on Tuesday, the highest since July 2021, according to data tracked by TradingView. On the other hand, Ethereum’s dominance rate has remained stagnant between 19% and 20%, despite the forthcoming upgrade.

The Shanghai upgrade will unlock more than 18 million ETH, of which only partial withdrawals of 1.1 million ETH, the coins earned as staking rewards, will be immediately withdrawable. The market is concerned that the unlocking may trigger a sell-off, causing uncertainty in the market.

Investor caution in pricing ether ahead of Shanghai stems from various factors, including concerns about regulatory issues and flooding the market with unlocked tokens. Analysts have recently said that the partial withdrawals will take several days to process and the resulting selling pressure is unlikely to be significant.

Lucas Outumuro, head of research at IntoTheBlock, noted that if all partial withdrawals are attempted just after the Shapella fork, it would take around four and a half days for these ETH profits to enter the market. According to Outumuro, full withdrawals representing most of the ETH staked will take longer, approximately 100 days, for one-third of validators to exit if they all attempt to exit simultaneously. This would make up about 1% of ETH’s daily trading volume, though it is unlikely that all withdrawals will be sold.

However, the market remains unconvinced, as evidenced by ether’s underperformance relative to bitcoin and ether put options, or bearish bets, drawing higher prices than call options. Regulatory concerns are also weighing on investors, as the U.S. Securities and Exchange Commission alleged in February that Ethereum staking services offered by centralized exchanges amount to selling unregistered securities in the U.S. This makes ETH riskier than BTC in terms of regulatory risk.

Lastly, Bitcoin has benefited from recent banking sector instability in the U.S. and the resulting sharp repricing of interest-rate expectations lower worldwide. The cryptocurrency has evolved as a macro asset in the past three years and has a history of drawing safe-haven bids during banking crises.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at

Published by
Nonhlanhla P Dube

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