Thomas Daniels
Ethereum (ETH) experienced a sharp rally, soaring nearly 20% following the successful implementation of the long-anticipated Pectra upgrade on May 7, 2025. The update, which consolidates the Prague and Electra hard forks, introduced critical enhancements including increased staking limits, improved wallet functionality, and broader scalability improvements intended to strengthen network efficiency.
This bullish momentum propelled ETH’s price from approximately $1,940 to $2,330 within a single 24-hour period, representing its most substantial daily gain since 2021. Alongside the price surge, open interest in ETH futures contracts rose by 21%, highlighting a notable uptick in long positions. As a result, over $750 million in short positions were liquidated, signaling a decisive shift in market sentiment.
Market analysts attribute this rally to a confluence of catalysts. Beyond the technical advancements introduced through Pectra, broader macroeconomic developments have buoyed market confidence. A newly formalized trade agreement between the United States and the United Kingdom, featuring reduced tariffs on British automobiles and steel, has contributed to improved investor sentiment. Furthermore, Coinbase’s $2.9 billion acquisition of crypto derivatives platform Deribit marks a significant signal of growing institutional confidence in the sector.
Despite the upswing, institutional engagement remains tempered. Spot Ethereum ETFs have registered consistent outflows, with a cumulative $41.1 million withdrawn over May 7 and 8. This cautious behavior suggests that institutional investors are adopting a wait-and-see approach, even as retail enthusiasm intensifies.
Historically, Ethereum performs robustly in Q2, with an average return of 62.2% since 2013. If this pattern holds, ETH could potentially reach $2,950 by the end of June. However, the existing divergence between retail optimism and institutional restraint may moderate this trajectory.
Meanwhile, the broader cryptocurrency market mirrored Ethereum’s gains. Bitcoin (BTC) reclaimed the $100,000 level for the first time in over three months, advancing 3.59% over the same 24-hour window. Overall market capitalization grew 4.95%, and the Crypto Fear & Greed Index climbed eight points to 73, entering the “Greed” zone—further underscoring a shift in investor sentiment across the sector.
