Ethereum Surges 8% to $2,702 on Pectra Upgrade and Lower U.S. Inflation

Ethereum (ETH) has experienced a significant price rally, gaining over 8 percent in the past 24 hours to reach a daily and local high of approximately $2,702. This surge follows a 40 percent increase last week, positioning the large-cap altcoin with a fully diluted valuation of about $322 billion for further gains.

The recent mainnet launch of the Pectra upgrade has been a major catalyst for Ethereum's price pump. This upgrade has enhanced the network's competitiveness against other layer one (L1) chains, particularly Solana (SOL). The Pectra upgrade has improved Ethereum's scalability and efficiency, making it a more attractive option for institutional investors looking to build and invest in the web3 space.

Another significant factor contributing to Ethereum's price rally is the lower U.S. inflation rate. The U.S. Bureau of Labor Statistics reported a 2.3 percent year-over-year drop in inflation for April. This economic indicator has led to a surge in interest from institutional investors, who are increasingly viewing cryptocurrencies, particularly Bitcoin, as an alternative investment.

Institutional demand for Ethereum has also surged as altcoins gain ground over Bitcoin's dominance. This increased demand is reflected in Ethereum's Futures Open Interest (OI), which rose by over 12 percent in the last 24 hours to approximately $32 billion during the late North American trading session.

Additionally, a short squeeze has contributed to Ethereum's price rally. Following the sudden rebound in Ethereum's price, there has been a significant surge in short liquidations. In the past 24 hours, Ether's leveraged market recorded more than $145 million in forced liquidations, with over $107 million involving short liquidations. This has increased the likelihood of a short squeeze, further driving up Ethereum's price.

Looking ahead, the wider altcoin market has experienced a significant surge in bullish sentiment as Bitcoin price attempts to rally beyond $105k. The Ethereum fear and greed index surged to over 75 percent, indicating a growing number of bullish investors. From a technical analysis standpoint, Ether’s price is well-positioned to retest its all-time high in the near future. In the weekly timeframe, the MACD line has crossed the signal line for the first time this year. Most importantly, Ether price has regained the macro support level above $2,360 after a notable correction in the first quarter.