Ethereum's Successful Shanghai Upgrade Triggers Fresh Rally, Drops Bitcoin's Dominance to 21-Month Low
After the successful Shanghai upgrade, Ether's rally above $2,000 reduced bitcoin's dominance rate from a two-year high, with ETH dominance surging to a one-month high.
On Wednesday, Ether (ETH) broke above the $2,000 mark following the successful implementation of the highly anticipated Shanghai upgrade. The upgrade helped reduce Bitcoin's (BTC) dominance rate, which dropped from an almost two-year high according to data from Coinpaprika. BTC's dominance rate had risen to as high as 49.06% earlier on Wednesday before falling to 48.12% as ETH's price increased. The last time the metric was around 49% was back in July 2021, some 21 months ago.
In contrast, ETH's dominance surged to 19.87% on Thursday, marking a one-month high. The BTC dominance rate measures the market capitalization of BTC compared to the total market cap of the cryptocurrency market. The metric is important to assess the relative strength of BTC, the largest cryptocurrency by market value, compared to the broader crypto market. It also helps to identify periods when altcoins outperform, also known as an altcoin season. Ether dominance, similarly shows the second-largest cryptocurrency's relative value to the crypto market.
Ether's improved performance has led to a reduction in Bitcoin's share of the crypto market. The shift has come after the successful deployment of the Ethereum network's long-awaited tech upgrade, also known as Shanghai or Shapella, late on Wednesday. The upgrade allowed for the withdrawal of more than 17.4 million staked tokens, worth approximately $35 billion, from Ethereum's proof-of-stake blockchain for the first time since its launch in December 2020. The successful deployment of the upgrade eliminated a slight but concerning risk that ETH investors might not be able to reclaim their tokens locked up in staking contracts.
As a result, ETH rose as high as $2,023 on Thursday, gaining 5% in the past 24 hours, according to CoinDesk data. This surge in ETH's price led the upswing of the broader crypto prices. BTC, which also reacted positively to the upgrade, is only up 1.5% through the day, lagging behind altcoins.
The Shanghai upgrade is expected to make the Ethereum network faster, more secure, and more efficient. The upgrade is also expected to reduce the transaction fees on the Ethereum network, which have been a significant source of concern for users in recent times. In addition, the upgrade is expected to increase the capacity of the network, allowing it to process more transactions per second.
The success of the Shanghai upgrade has also led to renewed interest in the Ethereum network and its associated tokens. Many investors believe that the network has significant potential for growth in the coming months and years, particularly as more decentralized applications are built on the network. As a result, many investors are looking to buy and hold ETH in anticipation of future price increases.
