In the early European trading hours on Wednesday, Bitcoin (BTC) dipped below the crucial $30,000 mark, with the overall market capitalization experiencing a 1.2% decline in the last 24 hours. Ether (ETH) led the drop among major tokens, trading just above $1,860. Solana's SOL managed to stay in the green, while BNB, Cardano's ADA, and XRP relinquished gains from Monday night.
Liquid Staking Tokens experienced a significant decline. Lido's IDO governance tokens fell by up to 10%, while Rocket Pool's RPL saw an 8% drop. Both protocols secure billions of dollars to offer yields on ether staking for users, allowing them to stake any amount of ether to earn rewards without needing to provide 32 ether to operate a validator node.
Data reveals that the drop on Wednesday morning resulted in more than 96% of longs, or bets on rising prices, being liquidated since the early Asian trading hours. Traders likely took profits in anticipation of two significant events scheduled for Wednesday: the U.S. Consumer Price Index (CPI) for March and the highly anticipated Shapella upgrade for the Ethereum network.
The U.S. Federal Reserve continues to be concerned about persistent inflation, and softer inflation data might allow the Fed to opt for a 25 basis points rate hike at the FOMC meeting on May 2. This could boost traditional markets and riskier assets such as Bitcoin. Conversely, the Shappella upgrade, a combination of the Shanghai and Capella upgrades expected to occur simultaneously on April 12, will enable investors to withdraw their ether staked on the Ethereum blockchain. Currently, staked ether cannot be withdrawn or traded freely.
Some believe the event could be bullish for ether as staking and capturing yields directly from the blockchain becomes more accessible for users. Chen Zhuling, CEO at staking service RockX, stated in a note to CoinDesk earlier this week, "Allowing withdrawals, boosted by the recent popularity of liquid staking platforms, will make ETH staking much more accessible to retail investors who were previously unwilling to stake ETH for an undetermined amount of time."
