For the past two years, Ethereum‘s price has lagged behind Bitcoin. But over the past two days, ETH has been outpacing BTC and other major coins, with three analysts whom Decrypt contacted attributing its huge gains to a flawlessly executed technical upgrade and a few hopeful signs about the global economy.
The analysts believe that Ethereum may have significant upside after languishing in the doldrums amid concerns about its underlying network’s speed and efficiency.
“The market is poised to reward ETH, the world’s second-largest crypto asset, as it emerges from internal challenges, layer-1 competition, and Q1 risk-off pressures,” said Joel Kruger, market strategist at LMAX Group, a financial technology firm offering foreign exchange and crypto trading services.
“With the Ethereum Foundation advancing upgrades and a favorable global macro risk environment, investors are seizing heavily discounted prices.”
On Thursday, the second-largest cryptocurrency by market capitalization smashed through the $2,000 threshold and later topped $2,400 early Friday, hitting its highest level in more than three months, according to crypto data provider CoinGecko. ETH, which was recently settled at $2,337, has gained 30% over the past 48 hours. Bitcoin has risen 8%.
Those gains, a continuation of an upswing in markets dating to early April, accelerated on Wednesday after the so-called Pectra upgrade, which aims to improve the Ethereum network’s scalability and user friendliness. Pre-launch testing of the upgrade hit some snags, but those were ironed out in time for the mainnet launch, which encountered no such issues.
Ethereum has faced increasing competition from Solana and other layer-1 networks whose proponents say are more capable than ETH.
“Enthusiasm only grew after this week’s flawless rollout of the Pectra upgrade, the biggest technical milestone since the merge,” GSR Research Analyst Carlos Guzman said.
He added that the upgrade, combined with “broader crypto tailwind fueled by encouraging macro headlines,” was causing the rally.
It was the second major improvement in three years for Ethereum, following the 2022 merge, which changed the network from a proof-of-work blockchain to a proof-of-stake blockchain.
Meanwhile, U.S. President Donald Trump this week appeared to ratchet back his trade war, signing a deal with the U.K. and suggesting plans to lower tariffs with China.
Risk-on assets responded with a flurry, with major indexes jumping on Thursday, including the tech-heavy Nasdaq and S&P 500.
Amberdata’s Director of Derivatives Greg Magadini told Decrypt that ETH last week was experiencing less volatility, and increased buying could lead it to “relief rally”—when negative news tends to be more positive than previously interpreted.
Even with this week’s spike, however, Ethereum remains considerably down from its 2021 record of $4,878. Bitcoin, meanwhile, is only down 5% from its own peak price set back in January.
Edited by James Rubin
