Ethereum Surges 40% on Network Upgrade, Trade Tensions Ease
1min read Ethereum's price surged nearly 40% last week, climbing from around $1,800 to $2,500. This rally was fueled by a successful network upgrade and easing global trade tensions, which renewed interest in digital assets. The Ethereum Pectra upgrade, which went live on May 7, improved staking limits and wallet usability, increasing confidence in Ethereum’s ability to scale and paving the way for further institutional adoption.
Analysts suggest that the rally was primarily driven by crypto-native investors rather than institutional inflows. This is evident from the $55 million in outflows from Ethereum ETFs, despite the significant price increase. The scale and strength of the price recovery, combined with these outflows, indicate that the surge was not driven by institutional investors but by those already invested in the crypto market.
The rally has drawn renewed interest in Ethereum, though analysts caution that further gains may depend on stronger fundamentals. The Ethereum Foundation's investment in Layer 2 technology is a significant development aimed at enhancing the scalability and efficiency of the Ethereum network. This investment, along with the Base protocol, which keeps 92% of transaction fees, indicates a robust ecosystem attracting both developers and users.
Institutional interest has also supported the rally, with Ethereum drawing significant institutional volume. This backing provides a solid foundation for the price rally, as it indicates that large investors are confident in Ethereum's potential. The recent price surge, which saw Ethereum gain 21% in a single day followed by a 7% increase the next day, is not an isolated event. Historically, Ethereum has experienced similar rallies on four previous occasions, all of which have proven to be significant.
However, analysts caution that while the rally is promising, it is essential to monitor the fundamentals closely. The Ethereum network's ability to handle increased transaction volumes and the continued development of Layer 2 solutions will be critical in sustaining the rally. Additionally, the community's engagement and the network's utility in decentralized applications (dApps) and decentralized finance (DeFi) protocols will play a crucial role in determining Ethereum's future price movements.
Volatility models give Ethereum a 20% chance of hitting $4,000 by year-end, though caution remains over macro risks. Without sustained institutional momentum and further clarity on regulation, there may be consolidation before any new all-time highs are tested. The recent rebound in digital assets reflects renewed market optimism, but it is based on sentiment and political moves, which may not be sustainable in the long term.
