Ethereum's Shapella hard fork, which took place on April 12, has drawn a surge of institutional interest to ether (ETH). The event decreased the risk of staking the blockchain's native token, allowing users to withdraw their coins at will. Furthermore, this hard fork resulted in the number of open, or active, ether futures contracts trading on the Chicago Mercantile Exchange (CME) increasing by 39%, surpassing the 12-month high of $675 million on Friday. Meanwhile, the U.S. dollar terms showed that interest had increased by over 70%.

Additionally, the number of ETH futures tied to ETH and BTC have been widely considered as a proxy for institutional activity. Moreover, even Non-CME exchanges such as Deribit have witnessed an increase in open-interest, soaring to the highest since the May 2021 record high of $778.6 million.

The price of ETH has also risen 8% since Shapella, and with the rising open interest, along with an increase in price representing an influx of new money into the market, this confirms the uptrend. To elaborate, the futures basis, or the spread between futures and spot market prices, has widened, with the annualized rolling three-month premium doubling to over 4%. This has attracted 'carry traders' to the market as it offers them to set up a market-neutral strategy by buying the underlying asset.

Furthermore, TDX Strategies' founder and CEO, Dick Lo noted that the attractive basis has brought more traders to the market, and Mr. Lo added, "Post the Shapella upgrade, unstaking withdrawals have been orderly and well-absorbed by the market and we are also seeing an uptick in staking from ETH holders. As ETH continues to be deflationary post-Merge and with the added attraction of staking yields which can be freely unstaked, we are seeing more bullish interest on ETH".

In conclusion, it is evident that Ethereum's Shapella hard fork has been a success, drawing institutional and non-institutional interest in the second-largest cryptocurrency by market value. The Shapella upgrade has succeeded in increasing ETH's futures open interest, reducing the risk of staking the blockchain's native token, while the attractable basis has resulted in traders taking advantage of their market-neutral strategy. All this has ultimately resulted in an 8% increase in ETH's price.



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