Ethereum Investors Show Uncertainty As April 12 Shapella Upgrade Draws Near

Ethereum Investors Show Uncertainty As April 12 Shapella Upgrade Draws Near

While Bitcoin investors are having a field day due to increasing prices, Ethereum’s market performance lags behind. This could be due to how many traders expect greater pressure to sell after the Shapella hard fork.

The upgrade will make numerous enhancements in terms of speed and security on the blockchain. Nevertheless, the event has led to increased uncertainty among investors, based on a Kaiko report.

What To Expect From The Shapella Upgrade

The upgrade is meant to allow users to withdraw their staked Ether tokens from the Beacon chain. This will be the first time in nearly three years that investors can finally withdraw their tokens since the release of the chain in December 2020.

Based on estimates by market analysts, the Shanghai upgrade is meant to add selling pressure worth around 1.2 to 3 million Ether. It’s one of the biggest reasons traders are being cautious right before the upgrade.

The report by Kaiko shows that Ethereum isn’t performing at the same level at Bitcoin. In fact, it’s lagging behind in spot and futures trading volumes. Meanwhile, data from the options market proves that traders are looking to add short-term hedging positions.

Ethereum Shows Slow Trading Performance

The data from the Kaiko report shows another finding with respect to Ether’s trading volume. In contrast to Bitcoin, Ethereum’s US dollar market share in trading volume fell to previous March 2021 levels of 30%.

This proves that Ethereum is struggling to keep up with Bitcoin’s spot trading volumes. After Ethereum’s last major upgrade, titled ‘The Merge,’ its market share with regard to Bitcoin increased to 53 percent.

It’s the same as how the increase in Bitcoin’s open interest volumes has bypassed Ethereum by a wide margin. This could be attributed to Bitcoin’s latest price surge above the $30,000 level.

Lack Of Trading Interest In Ethereum

The difference between Ether’s perpetual and spot trading volumes also indicates a decrease in trading interest. The ratio has now dipped below pre-Merge levels. Moreover, the options market is also reflecting an uncertainty surrounding the Shapella upgrade.

Ethereum options contracts that will be expiring in April show high implied volatility. In fact, the report’s findings show that it’s trending higher than all of Bitcoin’s timelines. Based on these findings, more and more traders are considering hedging their positions.

When there’s a higher demand for options, it shows that the market is expecting major price swings for the asset in question. And consequently, this means greater implied volatility.

The report elaborates that all Ethereum expiries are now closer to each other. In contrast, Bitcoin’s longer expiries have stayed stable. This proves that there is greater long term uncertainty surrounding Ethereum derivatives.