Ethereum Price Prediction: Explaining ETH Drab Performance After The Shapella Upgrade

The Ethereum Shapella upgrade finally took place last night, April 12. As many had predicted, it turned out to be a non-event, if Ether's price performance is anything to go by. Minutes after the upgrade, Ethereum was up only 1% with negligible fluctuations as it oscillated around $1,900.

Just a little over 5 hours later, Ether's price is at $1,917, a mere 0.12% hourly increase and 2.65% up in the last 24 hours, according to data from CoinMarketCap.

Shapella Hard Fork Officially Goes Live On The Ethereum Mainnet

The long-awaited Shanghai/Capella upgrade, christened the ETH staking unlock event, which had been widely advertised since late 2022, was finally executed on the Ethereum mainnet at 10.27 pm UTC on April 12 at epoch number 194,048.

According to Ethereum block explorer beaconchai.in, a total of 12,859 Ether were unlocked in 4,333 withdrawals within the first hour of the hard fork. Five hours later, these figures stand at 81,249 ETH tokens which have already been unlocked in over 30,400 transactions.

As the unlock event drew closer, the crypto community expected the demand for ETH to surge as investors "bought the rumor" with the hopes of turning the upgrade into a "sell-the-news" event once it goes live. Others believed that there would be no significant price action from Ethereum referring to the Shapella upgrade as a non-event, and advising investors to focus on other macroeconomic issues.

Since the total stake on the Beacon Chain is still above 18.1 million ETH, there are growing concerns about the potential selling pressure that may arise as the unlocking continues.

So, why has the Ethereum price ignored this historic event? Here are a couple of reasons.

First, the transaction fee on the Ethereum blockchain remains high, staying above $5 for more than one month now. It is important to note that the Shapella upgrade does not fully address this issue. This reduces the possibilities of a positive Ether price action after the hard fork as most decentralized applications (dApps) and projects opt for Layer 2 and rival networks that offer better rates.

In addition, decentralized exchanges running on the Ethereum network have been experiencing a decline in trading volume which has dropped by 84% from a weekly high of $38.2 billion at the beginning of last month.

According to data from DeFiLlama, the DEX volume on Ethereum had plunged over 23% over the last seven days to $5.93 billion. Meanwhile, rival networks recorded an average of 15% drop in volumes on average over the same timeframe, indicating that Ethereum was losing its share of the market.

Ethereum Price Analysis – Can ETH Rally Higher?

Ether's price slid into the four-hour Future Growth Value (FVG), extending from $1,845 to $1,808, triggering an upswing to areas above $1,900. This move will likely propel ETH to its next significant hurdle at the $2,000 psychological level.

Just like Bitcoin, Ethereum's lack of volatility has slipped the price into a range-bound movement. As long as the $1,845 support level holds, the bulls have nothing to worry about.

 ETH/USD Four-hour Chart

Note that Ethereum was trading above the major simple moving averages (SMAs), an indication that it enjoyed robust support on the downside. The SMAs were also facing upward, suggesting that the market still favored the upside.

While the upward outlook makes logical sense, a reentry into the $11,800 and $1,700 support zone would spell trouble for the Ethereum price. In such a case, ETH could revisit the midpoint at $1,750 or the range low at $1,687.

Even though there are no clear signs of a rally, traders also do not expect any panic selling. This means that unless there is a significant increase in the number of staking unlock requests, Ether's price could remain near $1,900 for the foreseeable future.

In the mean time, the Shapella upgrade remains a non-event.