Ethereum Bulls Gather Ahead of Pectra Upgrade

Traders are positioning for Ethereum's upcoming Pectra upgrade, raising questions about whether the historical "buy the rumor, sell the news" pattern will repeat. The upgrade is scheduled for early April, following successful testnets in late February and early March. According to QCP Capital, a crypto options trading desk, traders are bullish on the event, with volatility skewed in favor of calls from late March onwards.

Previous upgrades, such as The Merge in September 2022 and the Shanghai upgrade in April 2023, have seen ETH rally before the events, only to sell off afterwards. The Pectra upgrade aims to introduce eleven key features, including blob expansion and smart wallet capabilities. While Ethereum's average transaction cost has been rivaling Solana's, there hasn't been a notable uptick in demand for Layer 1 (L1) yet.

In the last 24 hours, options traders have been buying calls targeting $3.2k and $3k, while piling puts at the $2k support level. This suggests a short-term expectation of a surge to $3.2k with $2k as support. However, the odds of ETH reclaiming $4k by the end of April are relatively low, with traders pricing a 14% chance. The odds increase to 25% by June, suggesting a higher chance of ETH eyeing that level in the summer.

Despite muted price action, there has been significant accumulation of ETH, with investors moving the altcoin off exchanges. On 5 February alone, 367k ETH were moved from exchanges, indicating a strong accumulation trend as ETH dropped below $3k. Whether this accumulation trend will push ETH's price higher will depend on improvement in the broader market sentiment.