Crypto markets plummet as Shapella Euphoria fades
Regulatory and macro fears resurface
Crypto markets traded sharply lower in the past week as euphoria over Ethereum’s successful Shapella upgrade faded while regulatory and macroeconomic risks resurfaced.
Ether hit an 11-month high of $2,100 on April 15, but has since fallen nearly 15%, snapping its five-week streak of upward price action that began on March 10.
Bitcoin lost 7% of its value in the past week after trading above $30,000 for the first time since June 2022.
Ether’s relative underperformance can be attributed to stakers pulling back and selling their ETH after the Shapella upgrade. Since April 12, there have been net outflows of 546,000 ETH ($1.1 billion).
“The deteriorating sentiment among investors has reversed the initial euphoria leading up to and shortly after the Shapella upgrade, which was expected to drive more institutional investors to the asset,” said Daniel Takieddine, CEO of BDSwiss.
In addition, the initial ETH stake has fallen below 5% for the first time since March 31, according to Token Unlocks.
Another price increase in May
While the US Federal Reserve has been trying to cool inflation by raising interest rates for over a year, consumer prices remain high while riskier assets such as tech stocks and crypto have had a difficult year.
After the last 25bps increase in March, ETH and BTC fell by 4%.
Market participants overwhelmingly predict an interest rate increase of 25 bps at the central bank’s next meeting on 3 May.
Regulatory obstacles
Meanwhile, US regulators continue to take aim at crypto.
Congress is revising a draft bill that would require stablecoin issuers to provide monthly attestations of their reserves, along with banning certain types of algorithmic stablecoins.
The SEC sued the Bittrex crypto exchange, alleging that it had sold unregistered securities in the form of tokens such as ALGO and DASH.
CAKE crashes 25%
Decentralized exchange PancakeSwap’s CAKE governance token was the biggest loser among the top 100 digital assets, falling 24% in the past week.
The project launched PancakeSwap V3 earlier this month, aiming to take on the leading decentralized exchange Uniswap V3. PancakeSwap V3 on the BNB chain has processed $131M in trades in the last 24 hours.
The price action appears to be driven by an ongoing community debacle, which proposes to make CAKE an “ultrasound” token by drastically reducing CAKE emissions. An initial vote failed, as a whale of more than 98 million CAKE tokens voted against the proposal. However, a similar proposal will be put to a vote on 26 April.
