Bitcoin Falls Below $30,000, Ether Staking Tokens Take a Beating Ahead of Shapella Upgrade
Bitcoin (BTC) fell below the crucial $30,000 level in early European hours on Wednesday, with its overall market cap falling 1.2% over the past 24 hours.
Ether (ETH) traded just above $1,860, leading the decline among major tokens. Solana’s SOL remained in the green, while BNB, Cardano’s ADA and XRP gave up gains from Monday evening.
The so-called Liquid Staking Tokens fell. Lido’s IDO governance tokens fell as much as 10%, while Rocket Pool’s RPL fell 8%. Both protocols lock billions of dollars in return on ether stakes to users – who can stake any amount of ether to earn rewards without having to set up 32 ether to run a validation node.
Wednesday morning̵[ads1]7;s drop saw more than 96% of longs, or bets on rising prices, liquidated since early Asian hours, data show.
Traders likely took profits ahead of two key developments scheduled for Wednesday: the US consumer price index (CPI) for March, and the long-awaited Shapella upgrade for the Ethereum network.
The US central bank remains concerned about sticky inflation, and softer inflation data could allow the Fed to go for a 25 basis point rate hike at the FOMC meeting on May 2 – which could bolster traditional markets and riskier assets like bitcoin.
On the other hand, Shappella – a portmanteau of Shanghai and Capella, two major Ethereum network upgrades expected to happen simultaneously on April 12 – will allow investors to withdraw the ether staked on the Ethereum blockchain. Deposited Ether cannot currently be withdrawn or freely traded.
As such, some say the event could prove bullish for ether as staking and obtaining returns 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 indefinitely,” said Chen Zhuling, CEO of staking service RockX, in a note to CoinDesk earlier this week.
For now, however, traders seem to be taking risks.
