Is Ethereum's recent strong rally due to the Pectra upgrade?

Written by: Haotian

The sharp rise of Ethereum $ETH, many people have turned back and asked if it is related to the recent Pectra upgrade? The answer may not be.

The Pectra upgrade is more like the "finishing touch" of the Cancun upgrade, mainly some underlying optimisations and detail improvements, rather than breakthrough technological innovations.

From a technical perspective, the four EIPs included in the Pectra upgrade all point in the same direction: to make Ethereum run more stable and efficient. EIP-7044's state expiration standardisation, EIP-7524's fuel limit redefinition, EIP-7697's transaction pipeline optimisations, and EIP-6789's difficulty adjustment improvements are all typical "tinkering" upgrades that address some of the edge issues left after the Cancun upgrade.

The logic that really determines the price trend of Ethereum this time is actually the "value repair" after being over-FUDED.

In the past few months, Ethereum has indeed experienced a round of "concentrated fire" doubts: layer2 liquidity dispersion has been amplified into ecological fragmentation, performance comparison with Solana has been interpreted as a technical route failure, and the expansion of layer2 ecological applications has fallen short of expectations, and technical narrative stacks such as Restaking, modularization, and zk cannot be captured by value, etc.

While all the focus is on Ethereum, people are ignoring some key facts: the total value locked up in DeFi remains stable at $119B, the Cancun upgrade has indeed significantly reduced layer2 costs, ETF inflows continue to increase, and new narratives such as RWA and PayFi are also mainly developing in the Ethereum ecosystem.

Too big fundamentals aren't as bad as market sentiment suggests.

And institutional investors clearly see through this emotional imbalance. The most typical example is Abraxas Capital's huge purchase of 242,652 ETH (approximately $561 million). Moreover, from May 9th to 14th, large ETH transfers (>$1M) also increased significantly, and ETH balances in institutional-grade wallet addresses increased significantly, all indicating planned institutional large-scale position building.

Therefore, if you have to find a logic for this round of Ethereum rise: Ethereum has been FUD too much and needs to rediscover the existing value, and institutions have taken the opportunity to buy the bottom first?

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