Deirdre O Meara 
The Ethereum blockchain, which underpins the second-largest cryptocurrency, ether, is set to undergo a software upgrade called Shapella. This upgrade will allow investors to redeem an offshoot of ether tokens they have deposited in return for interest on the blockchain network over the past three years. These “staked ether” tokens currently account for about 15% of all ether tokens, according to data firm Dune Analytics, and are worth approximately $31 billion. The changes will likely lead to increased volatility for ether, with some investors predicting that widespread redemptions could lead to a wave of selling, thereby weighing on the price of ether.
Deutsche Bank analysts have warned that the release of this previously unrealized investment may lead to significant downward price pressure if it is immediately liquidated. In its last significant upgrade, Ethereum drastically reduced its energy usage in September, a move that proponents said would give Ethereum an advantage as it seeks to surpass bitcoin. However, ether has continued to lag behind its larger rival, gaining just under 60% this year versus a more than 80% jump for bitcoin.
After experiencing a bruising 2022 that saw trillions of dollars wiped from the crypto market, the sector has rallied in 2023 on expectations that central bank interest rate hikes are slowing. Ethereum has grown popular in so-called decentralized finance applications, which offer financial services while avoiding traditional industry gatekeepers such as banks. It remains, however, little used in mainstream commerce or finance.
Earlier this week, bitcoin breached the key $30,000 level for the first time in 10 months, adding to its steady gains as investors raised bets that the US Federal Reserve will soon end its aggressive monetary tightening campaign. Bitcoin has gained nearly 6% since the start of the month, after rising 23% in March. Crypto investment products attracted $57 million in inflows last week – albeit on low volume – with most of the money focused on bitcoin, digital asset manager CoinShares said on Monday. This brings digital asset flows back into positive territory for the year, the report showed.
“The market has done a great job at culling all leveraged participants in the past 18 months,” said Matthew Dibb, chief investment officer at Astronaut Capital, a Singapore-based crypto asset manager. “If (bitcoin) can survive the week over $30,000, we are going higher.”
