The Ethereum network’s long-anticipated Shanghai upgrade—also known as Shapella—has officially gone live, triggering a powerful rally in ETH price and reshaping market sentiment across the crypto ecosystem. Contrary to bearish expectations, Ethereum surged over 10.6% immediately after the upgrade, reclaiming the $2,100 mark for the first time since May 2022. This unexpected bullish momentum not only defied predictions of post-upgrade sell-offs but also triggered massive liquidations in short positions, with over **$85 million** in leveraged bets wiped out in just 24 hours.
What Was the Shanghai Upgrade?
The Shanghai upgrade marks a pivotal milestone in Ethereum’s evolution, serving as the final major step in its transition from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. While the shift technically began with The Merge in September 2022, one critical limitation remained: stakers could not withdraw their staked ETH or earned rewards.
That changed with Shapella.
Now, validators can fully withdraw their staked ether, accrued staking rewards, and even exit the network entirely. This newfound liquidity was widely expected to trigger a wave of sell pressure as early stakers cashed out. However, the market reacted in the opposite direction—demonstrating strong confidence in Ethereum’s long-term fundamentals.
"The ability to unstake ETH was seen by many as a potential catalyst for selling, but instead, it’s become a signal of maturation and increased trust in the network," said Ilya Volkov, CEO and founder of cryptocurrency trading platform YouHodler.
Market Reaction: ETH Defies Sell-Off Fears
Despite fears of a post-upgrade dump, Ethereum’s price climbed from around $1,910 to over **$2,116 within 24 hours, according to data from major exchanges. This 10.64% surge** significantly outpaced Bitcoin’s more modest 2.34% gain during the same period.
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What made the rally even more notable was the scale of short liquidations. Data from Coinglass revealed that approximately **$85.71 million** worth of ETH short positions were liquidated—more than **three times** the $27.37 million in Bitcoin shorts wiped out during the same window. This imbalance highlights how heavily traders were betting on a price drop, only to be caught off guard by the bullish reversal.
Why Did ETH Rally Instead of Drop?
Several factors contributed to Ethereum’s unexpected price surge:
- Accumulation Post-Upgrade: Many traders had been waiting for the upgrade to finalize before initiating long positions. With uncertainty removed, institutional and retail investors began accumulating ETH.
- Positive Macro Sentiment: Neutral inflation data from the U.S. and signs of cooling monetary tightening helped boost risk appetite across digital assets.
- Network Confidence: The smooth execution of the upgrade reinforced trust in Ethereum’s development roadmap and technical robustness.
- Staking Rewards Realization: While some stakers withdrew funds, many reinvested or held, viewing staking as a yield-generating mechanism rather than an exit strategy.
"Even if there’s increased selling pressure in the coming weeks, we don’t expect ETH to reverse its year-to-date bullish trend unless macroeconomic conditions deteriorate significantly," Volkov added.
ETH Price Context: Still Below All-Time Highs
Despite the recent rally, Ethereum remains well below its all-time high of $4,864.06, reached in November 2021—a decline of roughly 56%. However, its performance in 2025 has been strong, with ETH up over 60% year-to-date, trailing slightly behind Bitcoin’s 81% gain.
This recovery reflects broader optimism in the crypto market, fueled by regulatory clarity in key jurisdictions, growing institutional adoption, and increasing use cases for decentralized applications (dApps) built on Ethereum.
Key Takeaways for Investors
The Shanghai upgrade wasn’t just a technical milestone—it was a psychological and financial turning point for Ethereum holders.
- Liquidity Meets Stability: The ability to withdraw staked ETH introduces flexibility without undermining network security.
- Market Maturity: The lack of panic selling suggests that Ethereum’s investor base is becoming more sophisticated and long-term oriented.
- Short-Squeeze Dynamics: The massive liquidation event serves as a reminder of the risks associated with leveraged trading during high-volatility events.
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Frequently Asked Questions (FAQ)
What is the Shanghai upgrade?
The Shanghai upgrade (Shapella) is a major Ethereum protocol update that enabled withdrawals of staked ETH and staking rewards for the first time since the network transitioned to proof-of-stake in 2022.
Did the Shanghai upgrade cause a sell-off?
No. Despite expectations of a post-upgrade sell-off due to unlocked staked ETH, Ethereum’s price rose over 10%, indicating strong market confidence and accumulation.
How much ETH was liquidated after the upgrade?
Approximately $85.71 million in short positions were liquidated within 24 hours of the upgrade—over three times more than Bitcoin’s short liquidations during the same period.
Can I now withdraw my staked Ethereum?
Yes. The Shanghai upgrade fully enabled withdrawals of both staked ETH and accumulated staking rewards through validators or staking pools.
Is Ethereum still a good investment after the upgrade?
Many analysts believe so. With improved liquidity, ongoing ecosystem development, and increasing institutional interest, Ethereum remains a core holding in many crypto portfolios.
What are the core benefits of Ethereum’s move to proof-of-stake?
Proof-of-stake reduces energy consumption by over 99%, improves scalability potential, and allows users to earn yield by staking their ETH—making it more sustainable and economically inclusive.
Looking Ahead: Ethereum’s Roadmap Beyond Shanghai
The successful execution of the Shanghai upgrade sets the stage for future enhancements, including:
- Proto-danksharding (EIP-4844): Aimed at reducing Layer 2 transaction costs.
- Verkle Trees: To improve network efficiency and stateless client support.
- Further scalability upgrades: Part of Ethereum’s long-term vision to support millions of users seamlessly.
As Ethereum continues to evolve, its role as the foundation for decentralized finance (DeFi), non-fungible tokens (NFTs), and Web3 applications remains central to the crypto economy.
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Core Keywords
Ethereum, Shanghai upgrade, ETH price, proof-of-stake, staking rewards, crypto market, short liquidation, blockchain upgrade
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