ETH alert 🚨🚨

April 07, 2023

7 April 2023

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram

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Hello there,The mini bull-run which we have been witnessing in the past few weeks faced strong resistance on many accounts in the last week. BTC refused to go past the $30k mark as traders booked profit in the $28k-30k range. ARB saw a major crash due to DAO issues, and rumours sent BNB on a downward spiral.

So let’s hear the Top 5 stories of this issue.

1

Ethereum, LSD Tokens

. More on this in our lead piece today.

2

Crypto influencer Cobie

BNB crash with a rumour in an encrypted message stating there is an Interpol Red Notice on CZ.

3

Swiss Bank PostFinance

.

4

5

WEEKLY MACROS

Total crypto market cap - $1.22 trillion -

0.1%

Bitcoin market cap - $539.1 billion -

1.7%

The dollar index (DXY) - 101.9 -

0.2%

Bitcoin Dominance - 44.12% -

1.4%

Crypto Fear and Greed Index

- 64 - The market is in greedy condition with Bitcoin reclaiming the $28,000 level.

WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

0.5% as BTC has been consolidating between $26,500 and $29,100 for more than 2 weeks.

ETH Watch

4% as much anticipated Shanghai upgrade is scheduled for April 12th and along with it staked Ethereum gets unlocked.

Altcoins Watch

DOGE

:

13% with Twitter's web version getting a new uplift with Dogecoin replacing the bird logo.

LDO

:

11% as Liquid Staking Derivatives (LSD) narrative is back at action again with Shanghai upgrade around the corner.

ARB

:

13% with market maker pressuring the price to get back to the listing lows.

WHAT'S HOT

Coins to watch out for

Rocket Pool (RPL)

is a decentralized Ethereum staking pool offering up to 4.33% APR for ETH2 staking. Users can join the Rocket Pool with its decentralized node operator network or run their own nodes with only 16 ETH. Rocket Pool essentially offers anyone to participate in ETH2 staking, regardless of their capital investment or level of technological sophistication. RPL is currently at $45.6

Frax Shares (FXS)

- The Frax Protocol is the first fractional-algorithmic stablecoin system. Frax is open-source, permissionless, and entirely on-chain – currently implemented on Ethereum (with possible cross chain implementations in the future). The Frax Protocol is a community driven and unique design stablecoin. Over 60% of the supply of FXS is issued over a number of years to liquidity providers and yield farmers. FXS is currently at $9.6

Project to watch out for

Stader ETH

- is a multi-chain, non-custodial liquid staking protocol with ~100 mn USD+ in TVL, will soon launch its liquid staking token, ETHx. To run an $ETHx node, you’ll only need:

- 4 ETH bond requirement (the lowest in the ecosystem)

- 0.4 ETH worth in Stader's governance token, $SD

With lowest bond requirement in the ecosystem, this will bring more decentralization in terms of running a node.

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THE HOT TAKE

How the Shanghai Upgrade will impact ETH price

Quick brief:

Ethereum’s upcoming Shanghai upgrade, among other things, will give its users the opportunity to unstake ETH on its platform. Since December 2020, more than 18 million ETH has been locked on the blockchain (via staking) without the ability to withdraw these assets. Now, investors will be able to. What are the likely repercussions of this on the price of ETH? We capture some trends below.

1. Investors don’t have an incentive to sell right now

About 54% of ETH’s staked supply is currently at a loss (estimated price on staked date v/s today’s price). This means, investors will have to liquidate the assets below their cost price if they chose to sell today.

Given that ETH stakers are mostly long-term holders of the asset, this is unlikely to lead to a mass selloff. However, they can be tempted to take some profits out of their ETH earned via staking.

Source: K33 Research, Dune, Glassnode

2. 1.1 million earned ETH will flood the market

Post the upgrade, investors will be able to unstake their assets over time with a daily limit while the 1.1 million ETH they have earned in interests will be available immediately. That’s about $2 billion worth of ETH. Even in a scenario where everyone chooses to liquidate, compared to the daily trade volume of ETH at $10 billion on April 7, it does not seem to be significant. However, a short-term pull back can be caused in the market if ETH loses some key support levels because of sell pressure.

3. More ETH will staked now that they can be unstaked

Ethereum has the lowest share of staked assets among top layer-1 blockchains at 15-16% compared to 40%+ for others. The Shanghai update will, in fact, aid converting many ETH investors to staking - given the ability to withdraw any time.

Source: Stakingrewards.com

This is bullish for the blockchain over the long term. But it has also

some doubts on its ability to remain deflationary in terms of tokenomics.

However, we believe that adoption for Ethereum will grow when its staking product grows.

4. A sell-the-news event is likely

We remember how ETH rallied right into the Merge date in September 2022 but immediately retraced all its gains over the next few weeks. We anticipate such a scenario happening next month too. ETH should rally towards $2,000+ levels as the hype around the upgrade peaks. Once the upgrade is confirmed, selling pressure from unstaked ETH and market manipulation will likely lead to a short-term pull back in its price.

ETH price action leading to ‘The Merge’ in Sep. 2022

Source: TradingView

So when should you buy Ethereum?

Once the upgrade is successful and the dust settles will be the right time to invest in ETH for the long term, we believe. Ethereum continues to be a strong product in terms of adoption and its use case in this ecosystem. It will likely, along with Bitcoin, be the front runner in terms of risk-adjusted returns over a 3-5 year timeframe.

That’s it for this issue, see you next week.

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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