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(Bloomberg) -- Ether rallied to the highest since August after analysts said fears of rapid outflows following a highly anticipated software upgrade proved, so far, to be overdone Thursday.

The so-called Shanghai, or Shapella, update enables investors to stand in a queue to withdraw Ether coins they had pledged to help operate the network in return for rewards, a process known as staking. And so far, 96% of withdrawal volume has been from users withdrawing their rewards instead of their entire stakes, according to researcher Flipside Crypto.

Ether jumped as much as 5.6% to $2,016 on Thursday, bringing its year-to-date gains to 67%. The advance still trails the 81% surge in larger token Bitcoin, but analysts say there could be more upside to Ether, should withdrawals remain muted.

“What we’re seeing is a combination of a general liquidity-related bump and some overdue catch-up. ETH has notably underperformed BTC so far this year, with Shapella uncertainty keeping traders on the sidelines,” said Noelle Acheson, author of the “Crypto Is Macro Now” newsletter. “Now that Shapella went off without a hitch and didn’t produce a sell-the-news event, traders have more confidence coming in to the market — we’re seeing notable position-taking in ETH derivatives, for example.”

In the 12 hours after Shanghai, users have withdrawn an average of roughly 10,000 Ethers per hour, totaling 66,815 Ethers worth $128 million, or 0.3% of the 18.1 million Ethers that were staked, according to researcher Nansen. That said, the line to withdraw funds has stretched out to two weeks, according to Rated Network Explorer.

Major entities such as exchanges Kraken and Huobi are withdrawing a lot of staked deposits, per Nansen. Kraken recently settled with the US Securities and Exchange Commission and, as part of the agreement, has stopped offering staking services in the US.

Here’s what crypto market participants are saying about the upgrade and what it may mean for Ether:

Stephane Ouellette, chief executive of FRNT Financial Inc.:

In general, I think it is a bit of a relief rally that, at this point, the upgrade appears to have gone fine. I would point out that ETH continues to underperform BTC on a seven-day basis so I’d characterize the action as more of a catch-up with some buying holding off until post-upgrade. In general, the Ethereum 2.0 upgrade cycle has gone surprisingly well and is a vast improvement on the issues the development community had in earlier days.

Fiona Cincotta, senior financial markets analyst at City Index:

Ether is outperforming following the Shanghai upgrade as the market realizes that fears surrounding the pivotal hard fork were overdone. Demand for unstaking has been weaker than expected, and the relief rally is driving gains. The withdrawal process isn’t instant, and much of the staked ETH is in the red, making withdrawals less compelling, easing selling pressure and supporting the price. The fact that there hasn’t been a rush for withdrawals and that the liquidity picture has improved is a win-win. Now that the event is in the rear-view mirror, it’s time for Ether to play catch-up with Bitcoin.

Ilan Solot, co-head of digital assets at Marex:

It was a classic story of sell the rumor, buy the fact. I suspect there were plenty of investors out there that were either tactically short into the potential unlock of supply or waiting for the risk event to be behind us to buy ETH, hoping for a dip. None of these happened (so far). And of course, deposits are higher than withdrawal, validating this thesis.

Will Tamplin, senior analyst at Fairlead Strategies:

Ether broke out last week in a positive intermediate-term development on its chart. It is seeing upside follow-through following its upgrade, bringing it into resistance at the psychological threshold of $2,000. This level is a natural place for its rally to pause near term. A decisive breakout above $2,000 would be an additional positive on the chart of Ether, targeting secondary resistance near $2,400 over the coming months.

Fadi Aboualfa, head of research at crypto custodian Copper:

This particular narrative developed in the crypto space that once investors were able to unstake their Ethereum they would sell it. The problem with the narrative is that it discounts the fact that these investors who staked their ETH to begin with, and couldn’t withdraw, were staunch believers in the network, not just some random investors who are trying to make a quick 5%.