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Ethereum (ETH) is leading the charge in the crypto markets on Friday, as the price of the second largest cryptocurrency jumped 7% over the past day.
After climbing to an eleven-month high of $2,123.35, ETH is trading hands at $2,111, according to data from CoinGecko.
Ethereum developers successfully completed the long-awaited Shanghai hard fork on Wednesday, opening the doors to withdrawing the funds previously staked by the network’s participants.
While some experts agreed that enabling staked ETH withdrawals would hardly lead to significant sell pressure, few anticipated a sharp increase in price either.
Yet, Ethereum jumped 6% on Thursday, trading around $2,000 for the most part of the day, before experiencing another surge in the early hours of Friday.
One possible reason for the price rise is that along with the ability to withdraw the staked funds (not necessarily meaning that those funds will be sold), the Shanghai upgrade also means that investors are now able to stake coins on the Ethereum mainnet, providing a source of passive income. Furthermore, the upgrade has provided financial institutions with greater confidence in their staking-as-a-service offerings.
“It is entirely possible that there will be more people willing to stake ETH (locking up liquidity and reducing the available supply) after the upgrade, as people will be more certain that they can safely unstake their ETH," Matthew Niemerg, co-founder of privacy-enhancing blockchain network Aleph Zero, previously told Decrypt.
Onchain data shows that a total of 277,o46 ETH ($58.5 million) has been withdrawn since the Shanghai update.
The governance tokens of several liquid staking platforms, including Rocket Pool, Lido DAO, and Frax Shares, have also seen significant price increases. These platforms enable Ethereum holders to stake their ETH and receive a liquid staking token in return, which can be used within the DeFi ecosystem to generate additional yield.