The world of cryptocurrencies frequently fluctuates in prices depending on both macroeconomic and sectoral developments. Although this is not uncommon, Ethereum Investors seem much more worried ahead of the upcoming Shanghai update. According to the latest data from CryptoQuant, ETH assets are leaving the derivatives exchanges fast. So what does this mean? Here are all the known details.
The Shanghai update is an important update that has been expected by the Ethereum community for some time. With this update, the network will experience some major changes, such as a new fee structure and a reduction in block rewards. These changes may be so extensive that they affect the supply and demand of ETH. As such, it is quite possible to see some fluctuations in the token price.
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Just days before the Shanghai update, the activity of traders started to increase. According to the data, traders have been acting very cautiously lately and are transferring their assets from derivatives exchanges to spot exchanges. This shift is due to the belief that spot exchange activity will be more critical than derivatives exchange activity after the update. Derivative exchanges allow investors to bet on the future price of an asset, while spot exchanges allow them to buy and sell the asset itself.
CryptoQuant‘s data underlined the importance of Ethereum’s exit from derivatives exchanges. This could be a sign that investors are preparing for a period of volatility in the ETH market. The move to spot exchanges shows that investors want to buy and sell the asset directly, rather than speculating about its future price.
Although it is difficult to predict how the update will affect the value of the ETH price, market participants believe that a change will come. Considering that the structure of the cryptocurrency market is almost directly tied to the participants, ETH investors should be careful.
You can follow the current price action here.