Ether, the second-largest cryptocurrency, is stealing Bitcoin’s thunder with a jaw-dropping 45% surge this month, its strongest performance since late 2021. After months of lagging behind rivals like Bitcoin and Solana, Ethereum’s native token is roaring back. Fuelled by a major blockchain upgrade, shifting investor sentiment, and fresh institutional interest, Ether’s rally signals a potential turning point. Let’s unpack the forces behind this crypto comeback.
The Pectra Upgrade: A Game-Changer for Ethereum
Ethereum’s long-awaited Pectra upgrade, launched May 7, ignited Ether’s rally. The overhaul, its largest since 2022 boosts transaction efficiency, slashes costs, and simplifies smart contract interactions. Traders immediately reacted: Ether’s price jumped 21% within days, while open interest in derivatives hit $25.8 billion. Alex Cheung of Abra Prime notes the upgrade positions Ethereum to handle growing Web3 demand. Meanwhile, the ETH/BTC ratio rebounded from five-year lows, signalling renewed confidence. “Pectra makes Ethereum faster and cheaper,” Cheung says. “That’s critical for mass adoption.”
Crypto Sentiment Shift
Risk appetite surged globally after the U.S. and China paused tariff hikes, sparking rallies in stocks and crypto. The Nasdaq exited bear territory, while the S&P 500 turned positive for 2025. Ether, often seen as a “tech proxy,” rode this wave. Anthony Rousseau of TradeStation argues Ether’s rise isn’t just technical. “Investors are chasing undervalued assets,” he says. With Bitcoin stabilising near record highs, traders pivoted to Ether, still 37% below its 2021 peak. The shift mirrors 2023 patterns, where altcoins soared after Bitcoin plateaued.
Institutions Bet Big on Ether ETFs
U.S. spot Ether ETFs, launched in July 2024, have drawn $577 million in inflows, outpacing Bitcoin funds late last year. BlackRock’s growing use of Ethereum for tokenising assets adds credibility. Over $6.9 billion in real-world assets, like bonds and commodities, now live on Ethereum. “Institutions see Ether as more than a currency,” says Bernstein analyst Gautam Chhugani. “It’s the backbone of DeFi and tokenisation.” Layer-2 solutions like Arbitrum further attract enterprises by cutting gas fees. This institutionalisation separates Ether from Bitcoin’s “digital gold” narrative.
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Short Squeezes
A $437 million short liquidation frenzy supercharged Ether’s surge. As prices climbed, bearish traders scrambled to exit, creating buying pressure. Simultaneously, Ethereum’s “mega-whales” gobbled up tokens, hoarding 40.75 million ETH, the most since March. “When whales accumulate, retail follows,” says LMAX’s Joel Kruger. The ETH/BTC ratio’s rebound to 0.035 also lured investors betting on an “altseason.” Historically, Ether’s strength foreshadows rallies in smaller coins like Solana and Cardano.
Tightening Supply
Nearly 28% of Ether’s supply is locked in staking contracts, yielding 3% annually. This reduces circulating tokens, amplifying price moves when demand spikes. With Federal Reserve rate cuts looming, staking’s appeal grows against traditional savings. Ethereum’s shift to proof-of-stake in 2022 also contrasts with Bitcoin’s energy-heavy mining. “Staking rewards make Ether a dual-threat asset,” says Sean Dawson of Dervive.xyz. “You gain from price rises and passive income.”
Ethereum’s Edge
While Bitcoin dominates as a store of value, Ethereum powers innovations like NFTs, metaverse projects, and AI-driven apps. Over half of all blockchain smart contracts run on Ethereum, securing its lead in Web3 development. Ether also mirrors tech stocks more closely than Bitcoin, rising alongside Nasdaq rallies. “Ethereum isn’t just currency; it’s infrastructure,” notes Anthony Sassano, predicting a $15,000 price by 2025.
Risks Remain, but Momentum Builds
Despite Ether’s rally, volatility lingers. Regulatory shifts or stalled network growth could derail progress. Yet with upgrades like Pectra enhancing scalability and institutions diving into ETFs, Ethereum’s foundation looks stronger than ever. As Bitcoin dominance dips to 56.5%, traders eye Ether’s next move. For now, the crypto’s resurgence shows a truth: In blockchain’s evolution, utility trumps hype.
Written By Fazal Ul Vahab C H
