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Ether-Bitcoin Ratio Likely to See Deeper Decline After Shapella Upgrade: QCP Capital
Ether has underperformed bitcoin in the lead up to the Shapella upgrade, resulting in a 13.7% year-to-date decline in the ETH/BTC ratio.
Updated Apr 12, 2023, 3:48 p.m. Published Apr 12, 2023, 12:28 p.m.
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Singapore-based crypto options trading giant QCP Capital expects a deeper decline in the ether-bitcoin (ETH/BTC) ratio following the impending Shapella hard fork, dubbed Shanghai upgrade.
"ETH/BTC has broken through the key support level of 0.658 and can potentially head back to 0.0553, as continued and sustained spot selling pressure in thin markets for days after Shapella leads to further bearish price action on ETH," QCP Capital's market insights team told CoinDesk.
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The ETH/BTC ratio has declined 13.7% this year amid lingering fears that investors will rush to liquidate coins after Shapella opens withdrawals of staked ether.
According to some analysts, the selling pressure will be distributed over several days, allowing buyers to absorb selling pressure and keep prices steady. QCP, suggests otherwise.
"We fail to see what the bullish case can be for this event as those at the front of the queue [in withdrawals] are likely to sell spot, while those further back will be hedging via perps/futures if they have not already done so," QCP noted.
Users cannot withdraw the entire stack of over 18 million staked ether immediately after the upgrade. However, just over 1 million ETH earned in staking rewards can be pulled out immediately. Troubled entities like crypto lender Celsius might sell its staked ether balance of 158,176 ETH to recover at least a portion of creditors' funds, according to K33 Research.
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Bitcoin’s onchain data points to supply overhang and weak participation, while gold’s breakout is priced by markets as a durable macro regime shift.
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