Crypto Markets Plummet As Shapella Euphoria Fades
Regulatory and Macro Fears Resurface
By: Tarang Khaitan • Loading...Markets
Crypto markets traded sharply lower over the past week, as euphoria over Ethereum’s successful Shapella upgrade wore off while regulatory and macroeconomic risks resurfaced.
Ether hit an 11-month high of $2,100 on April 15 but has since plummeted nearly 15%, breaking its five-week streak of upward price action that began on March 10.
Bitcoin shed 7% of its value in the past week after briefly trading above $30,000 for the first time since June 2022.
Ether’s relative underperformance could be attributed to stakers withdrawing and selling their ETH after the Shapella upgrade. Since April 12, there have been net outflows of 546,000 ETH ($1.1B).
ETH Net Staking Balance. Source: TokenUnlocks
“The deteriorating sentiment among investors has reversed the initial euphoria that led to and shortly followed the Shapella upgrade, which was expected to drive more institutional investors to the asset,” said Daniel Takieddine, CEO of BDSwiss.
In addition, the native ETH staking yield has dipped below 5% for the first time since March 31, according to Token Unlocks.
Another Rate Hike In May
While the US Federal Reserve has been trying for over a year to cool inflation by hiking interest rates, consumer prices remain elevated while riskier assets like tech stocks and crypto have faced a rough year.
After the most recent 25bps hike in March, ETH and BTC dropped by 4%.
Market participants overwhelmingly predict another 25 bps rate hike at the central bank’s next meeting on May 3.
Meanwhile, US regulators continue to take aim at crypto.
Congress is revisiting a draft bill that would require stablecoin issuers to provide monthly attestations of their reserves, along with banning certain types of algorithmic stablecoins.
The SEC sued the Bittrex crypto exchange, alleging that it had sold unregistered securities in the form of tokens like ALGO and DASH.
CAKE Crashes 25%
Decentralized exchange PancakeSwap’s CAKE governance token was the biggest loser among the top 100 digital assets, with a 24% drop in the past week.
The project launched PancakeSwap V3 earlier this month, aimed at taking on the leading decentralized exchange Uniswap V3. PancakeSwap V3 on the BNB Chain has processed $131M of trades in the past 24 hours.
The price action appears to be driven by an ongoing community debacle, which proposes to make CAKE an “ultrasound” token by drastically reducing CAKE emissions. An initial vote failed, as a whale with more than 98M CAKE tokens voted against the proposal. However, a similar proposal will be put up for a vote on April 26.
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