Coinbase Institutional Assesses Ethereum and Bitcoin Price Development Ahead of Shapella Upgrade

Ahead of the Ethereum Shapella upgrade, Coinbase Institutional weighed in on the mainnet upgrade’s potential impact on Ether and Bitcoin (BTC). In a YouTube podcast, the team provided insight into whether the much-anticipated April 12 upgrade will further advance the ongoing crypto rally. The Coinbase Institutional team also discussed the bear market scenario for Ethereum and Bitcoin post-Shapella.

According to Coinbase Institutional, BTC purchases dominated the digital currency landscape – especially in the first quarter of the year. However, the team also pointed out that Ether (ETH) purchases are increasing on Bitcoin, often outstripping the leading crypto. Coinbase Institutional explained that ETH is making a strong case in the second quarter because BTC is slightly overbought.

Coinbase Institutional Compare Ethereum, Bitcoin Rallies

Ether’s rally sees the popular altcoin range in the $1,750 to $1,850 price range ahead of the Shapella upgrade next week. At press time, the second largest digital currency by market capitalization was changing hands at $1,880.47. Trading at a 9-month high, ETH has rallied roughly 6% over the past three days, with BTC flat across the stretch.

The Coinbase Institutional team also touched on the expected number of initial ETH withdrawals after the upgrade. According to David Duong, Head of Institutional Research:

“There are a lot of variables here. [however]we still think the most likely group to withdraw is going to be [ETH] solo stakers.”

Duong added that broader withdrawals will depend on bullish or bearish market sentiment after the upgrade.

In addition to Shapella development, the Coinbase Institutional team also covered a wide range of blockchain-related topics. These include market updates, macro and research, trade flows, decentralized finance (DeFi) and Web3.

Recent Ethereum Rally Reminiscent of September Merge Build-Up

ETH’s recent rally is typical of such price increases leading to a major upgrade of the online network. During the protocol’s upgrade from “proof-of-work” to the less energy-demanding “proof-of-stake” module last September, Ether’s price also rose. Commenting on September’s merger, which saw miners replaced by validators, Ethereum Foundation researcher Danny Ryan said:

“Ether itself becomes a productive resource. It’s not something you might just speculate on, but it’s something that can make money.”

Ryan also referred to validators leveraging their existing Ether cache to verify transactions and create new tokens as “the lowest risk [ecosystem] return.”

Ethereum upgrade and what it means for token holders

Starting next Wednesday, Shapella will allow Ether owners to withdraw their holdings and access tokens more easily. Until this point, ETH investors had to exchange their locked crypto for a token of equivalent value via third-party channels. These include centralized exchanges like Coinbase (NASDAQ: COIN ) or DeFi platforms like Lido.

Although the upcoming Shapella will unlock much of Ether’s locked assets, which make up 15% of the total supply, there is one main concern. Some analysts believe that the release of so many tokens will have a flood effect on the market. For example, around $2.4 billion in ETH could enter the open market, even with limited withdrawals.

Blockchain player Ilya Volkov weighed in on Shapella’s impact, saying that “There will probably be a fall shortly after the upgrade is completed, as a huge amount of ETH will be unlocked, and many people will also sell their ETH”.

However, Volkov also added that he remains bullish on the long term.

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