Crypto's major milestone
Ethereum did it again
Welcome back. Just curious—will you grab one of Solana’s new “crypto-forward” Saga phones when they drop on May 8? Price point for the smartphone that doubles as a crypto hardware wallet: $1,000. Hit that reply button and tell me if you’re about to start sending green texts.
Today: Everything you need to know about Shapella, a16z’s bullish findings on crypto, and some serious Bitcoin price action. Buckle up.
Dawn of a New Ethereum Era
Ethereum’s successful deployment of the Shapella upgrade last Wednesday was widely celebrated as a historic milestone for crypto. Let’s unpack why.
Terminology confusion: Ethereum devs recently started referring to the upgrade formerly known as “Shanghai” by its new name, “Shapella.” Why? Shapella is the technically correct term—it includes both the Shanghai and the Capella upgrades, which refer to changes at Ethereum’s execution and consensus layers, respectively.
Why Shapella is big news:
The upgrade marks the completion of Ethereum’s move to proof-of-stake (PoS). The Merge kicked off the transition last September, but ETH staking remained a one-way street—validators could only stake (not withdraw) their funds.
Shapella changes that. It enables users to unlock their staked ETH (and the corresponding staking rewards), some of which has been locked up since 2020.
The impact: Bearish analysts feared that the upgrade’s massive unlocking of staked tokens would lead to mass withdrawals, putting major sell pressure on ETH. But instead of a post-Shapella dump, ETH rallied more than 10% to above $2,100—its highest level since May 2022. Further bucking analysts’ predictions, data from Nansen shows that less than 1% of previously staked ETH is in queue waiting to be withdrawn.
So, what’s next? Despite Shapella’s completion, Ethereum is still in development mode. The network’s roadmap has an extensive list of future upgrades (with fun names like proto-danksharding, the Verge, the Purge, and the Scourge) that will attempt to increase Ethereum’s scalability and efficiency.
A16z Says We're on the Right Track
Venture capital heavyweight Andreessen Horowitz (a16z) released its second annual “State of Crypto” report last Tuesday, casting a bullish light on crypto.
Some key takeaways:
Blockchains are gaining traction. The number of active addresses doubled over the last two years to an all-time high last month as more emerging blockchain applications offer users new ways to engage.
Web3 gaming is going strong. 700 new blockchain games launched last year. The web3 gaming sector now generates 23x more on-chain transactions than DeFi.
Builders are still bullish. Developers drawn in by the 2020 bull run are sticking around as the number of active devs in the crypto space holds steady. A16z’s data shows devs are particularly interested in “zero knowledge” systems as of late.
The U.S. is losing its crypto dominance. Since 2018, the proportion of crypto devs in the U.S. vs. the rest of the world fell 26%.
A grain of salt: A16z’s report stands in stark contrast to the pessimistic crypto narrative from U.S. regulators and many mainstream media outlets, but a16z has considerable skin in the crypto game. The firm launched a $4.5 billion web3 fund last year and is invested in web3 heavyweights like Solana, Avalanche, Coinbase, and OpenSea.
Bitcoin to the Moon?
Bitcoin broke $30,000 last week—a symbolic psychological threshold BTC hasn’t moved past since June 2022.
Why? Investors are expecting looser monetary policy from the Fed after several rate hikes. Hopes are that this could inject lots of liquidity into risk assets.
Quotable: "While the 2020-2021 period was perceived as Bitcoin's breakthrough moment, the present time truly marks its ascendance onto the global stage as a formidable asset,” Bob Ras, co-founder of Sologenic, told CoinDesk. “Amidst heightened geopolitical instability, faltering banking systems and mounting concerns surrounding reserve currencies, bitcoin has emerged as the reliable refuge that many had anticipated.”
But what do you think—which stages of the market cycle are we currently in?
In other news:
Former President Donald Trump made big bucks on his controversial NFT collection.
Sweden’s days as Europe’s last remaining BTC mining stronghold are over.
Twitter’s new partnership with eToro is CEO Elon Musk’s latest move to build out his “super app” vision.
$3.4 billion in stolen Silk Road BTC was found inside a Cheetos popcorn tin.
Crypto Job Board
And that's what you need on your radar today in crypto. Don’t forget to shoot me a reply with your market cycle thoughts. Catch you back here next Tuesday!