Bitcoin Surges 10% to $100,000, Ethereum Rises 30% on Pectra Upgrade

Over the past 48 hours, the cryptocurrency markets have experienced a significant surge, with Bitcoin (BTC) breaking the $100,000 barrier for the first time since early February. This rally has been driven by a steady uptrend in BTC, which has been consolidating above the critical $91,000 level for the past two weeks. The trend has been primed to resume, with only a brief test below $93,000 a few days ago.

Ethereum (ETH) has also seen strong upside momentum, with its price increasing by approximately 30% since Wednesday. This rally has been attributed to the recent Pectra upgrade, which introduces long-awaited improvements to Ethereum’s efficiency and scalability. The surge in trading volumes for ETH is seen as a positive sign, indicating strong market interest.

Institutional developments have also played a significant role in the market's recent performance. Coinbase's acquisition of Deribit, the leading off-chain venue for crypto options, has been highlighted as a key driver of growth for Coinbase. This acquisition is expected to help Coinbase expand globally and tap into the growing derivatives market.

Analysts have noted that the recent price action has been driven by heavy call spread activity and optimism around trade developments. Traders are currently chasing frontend volatility, creating a positive spot-vol correlation through mid-May. However, implied volatility (IV) softens past June, suggesting that the rally may not be aggressively pursued further out.

Trader sentiment remains overwhelmingly bullish, with a significant portion of ETH and BTC premiums being used to buy calls. This bullish sentiment is reflected in the broader crypto market landscape, where ETH is playing catch-up with a 25% rally in the ETH/BTC ratio. Beyond the major cryptocurrencies, there are also signs of strength in the long tail of crypto assets, with the TradingView’s OTHERS index up by 16% and stablecoin dominance dropping.

The recent US-UK trade deal has been credited by some with boosting market risk appetite, although its impact is largely symbolic. The deal is more of a framework than a concrete agreement and will have limited impact on US exports and tariffs on UK imports. However, even the optics of such deals can move markets, as they create hope for more concessions and better market conditions.

With these developments, there is a growing expectation for further short-term upside in the crypto markets. The chance of ETH settling above $2,500 by the end of the month has surged, and the chance of BTC hitting over $115,000 by month’s end has also increased. This bullish outlook suggests that the crypto market may be on the cusp of a renewed bull run, with the potential for an alt season on the horizon.