Ethereum Awakens: Pectra Upgrade Triggers Major Rally and Renewed Investor Optimism

Ethereum, long considered the sleeping giant of the crypto world during this current market cycle, has at last let loose a thundering rally and come back to life.

After a year during which it underperformed not only Bitcoin but also many other major assets, Ether (ETH) has surged by more than 50% from $1,800 to $2,700. The rally has concentrated much of its power into the days since May 7, 2025, accomplishing what many had long hoped for.

The much-anticipated Pectra upgrade, which went live on May 7, catalyzed this dramatic move. It appears to have reignited investor confidence, triggering Ethereum’s largest daily gain since May 2021—a remarkable 21.8% jump in just 24 hours.

A Long-Awaited Breakout

Throughout much of this bull cycle, Ethereum has had a hard time keeping pace. While Bitcoin and other altcoins made noise with new all-time highs and vigorous rallies, ETH was pretty much dormant, much to the dismay of long-time supporters and traders. This situation stemmed from a complex mix of factors: the sometimes-shallow development of Ethereum’s core technology, overly ambitious roadmaps (like for something called “sharding”) that have proven hard to fulfill, innate scaling problems that are common to public blockchains, and an overall market that seems to have “rediscovered” Bitcoin as the institutional-grade, go-to vehicle.

That narrative began to shift rapidly with the Pectra upgrade. This latest network update brings a range of performance improvements and sets the stage for further scalability enhancements—key concerns that had weighed on Ethereum’s performance.

Within days of the upgrade, Ether’s price shot up, coming from a cycle low of about $1,800 and climbing to around the $2,700 level, which represents a 50% gain in barely any time at all. This wasn’t just a simple upturn; it was a clear technical breakout that even some mainstream analysts took notice of and described favorably.

From Despair to Hope: On-Chain Metrics Turn Positive

The significant impact of the price rally on investor sentiment and wallet profitability cannot be overstated. After a sharp sell-off that started in December 2024, Ethereum holders watched their profitability deteriorate at an alarming speed. By April 2025, only 32% of Ethereum addresses were in the green—a stark fall from over 90% profitability just a few months earlier.

This drop in profit-making ability happened during a time of confidence being shaken and also of extreme ups and downs for Ethereum. But Ethereum’s recovery has been just as strong. By May 2025, almost 60% of people who own Ethereum find that their holdings are now worth more than they paid. What’s particularly stunning is how quickly things have turned around in terms of confidence and Ethereum’s on-chain metrics. This isn’t something that’s happened since the bull run of 2017.

This surge has seen the market volatility reach levels not seen in years. Analysts say the recent behavior of prices in Ethereum is akin to that of 2017, a year with some of the wildest price swings—and most explosive market action—in recent memory.

This renewed growth may indicate that Ethereum has moved beyond the accumulation phrase and is entering a new growth cycle, one that is once again backed by fundamentals and now also “development-activity-led” growth.

Institutional Interest Heats Up With ETF Inflows

In a further indication of institutional interest in Ethereum, the spot Ethereum exchange-traded funds recorded a net inflow of $587,100 on May 21. This represented the fourth consecutive day of positive inflows.

While the figures are small in comparison with those associated with a Bitcoin ETF, the reliable daily inflows tell a different story, one less about the amounts involved and more about an increasingly confident institutional class willing to place a bet on Ether’s future. Investors can achieve diversified exposure to crypto through Grayscale’s Ethereum Trust. Its narrative is compelling.

Determining whether ETH can maintain this rally will crucially hang on the success of spot Ethereum ETFs. They should, after all, be fairly straightforward. With the kind of investor demand that Ethereum has shown (especially in 2021 and 2022), it’s not clear why we couldn’t have a spot Ethereum ETF, or at least why one would be considered riskier than a spot Bitcoin ETF, which already exists.

Conclusion: Ethereum Is Back on the Radar

Following several months of waning performance and a lack of trading interest, Ethereum has decisively remade its appearance—once again, profitably and favorably in the eyes of many. The Pectra upgrade has fired up the long-expected bull run, and it seems almost a coincidence that Ether’s price surge at the time of this writing was very much in line with the hopes and expectations of many institutional and retail investors.

• Ethereum has surged 50% in under a month thanks to the Pectra upgrade.
• ETH has gained 50% in under a month, fueled by the Pectra upgrade.

The on-chain indicators depict a sharp surge in the profitability of wallets.

• The levels of volatility reflect the explosive 2017 cycle.

Institutional interest in spot Ethereum ETFs is rising, as is evident from the steady inflow of funds into these investment vehicles.

Ethereum’s momentum seems to be back. The breakout that occurred in the past week has many Pundits seeing the top altcoin in the crypto space trying to clear a path back toward $2,000. But as always, there will be resistance, and if anything, Ethereum seems to be hugging those trend lines much tighter than it did back in June.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!