Ethereum Leads Crypto Market: Is Copycat Season Really Coming? Bitcoin regained its $100,000 mark after three months of volatility, while Ethereum led the rally with a staggering 20% gain in a single day. This sudden market is not accidental, but the result of a combination of factors, among which Ethereum's technical upgrade and regulatory expectations constitute the core driving force. Market performance and data interpretation According to Quantify Crypto data, the price of Bitcoin broke above $104,000, up 7.41% in 24 hours, hitting a new high in nearly three months. Ethereum performed even better, with the price breaking through $2,200, up 20.1% in 24 hours. Other mainstream altcoins also showed a general upward trend, with SOL breaking through $160 (up 8.9%) and DOGE breaking through $0.19 (up 11.38%). The ETH/BTC exchange rate hit a new one-month high of 0.0218, up 13% on the day. There has been a marked reversal in overall market sentiment. According to Alternative data, the Panic and Greed Index has risen rapidly to 73 from extreme fear a month ago, entering the greed zone. According to CoinGecko statistics, the total market capitalization of cryptocurrencies exceeded $3.3 trillion, up 5.26% in 24 hours, reflecting a rapid recovery in investor confidence. The substantial impact of Ethereum's technical upgrades The Pectra upgrade has brought a number of key improvements to Ethereum that directly increase the value of the network. The first is the increase in block throughput, which can theoretically increase the transaction processing capacity by 15-20% by optimizing the block processing mechanism. This improvement has practical implications for the Ethereum network, which has long been plagued by high gas fees. The optimization of the EVM object format is another important breakthrough. The new format reduces contract deployment and invocation costs by about 30%, making the execution of complex smart contracts more efficient. According to testing by Ethereum's core development team, the average gas consumption of a typical DeFi transaction is expected to decrease by 18-22%. The advancement of account abstraction has greatly improved the user experience. The ERC-4337 standard enables smart contract accounts to replace traditional EOA accounts, and users no longer need to directly manage private keys. According to Dune Analytics, dApps with account abstraction have a user retention rate that is more than 40% higher than traditional dApps. Together, these technical improvements strengthen Ethereum's Layer 2 ecosystem. According to L2Beat data, TVL on major Layer 2 networks increased by 12% in the week following the announcement, with average daily trading volume up 25%. Technology upgrades reduce transaction costs, improve data availability, and create a more developer-friendly environment. Regulatory expectations and market psychology The approval window for the staking function of Ethereum spot ETFs in early June has become another focus of market attention. If the staking service is approved, it will bring investors an additional 4-6% annualized return. According to Glassnode's analysis, similar staking yields are equivalent to the level of high-yield bonds in traditional financial markets, but are more attractive to institutional investors. Regulatory trends and technological advances create synergies. The SEC's shift in attitude towards Ethereum ETFs sent a positive signal, and the Pectra upgrade provided fundamental support for this optimistic outlook. This double tailwind has made Ethereum better than Bitcoin in terms of risk-adjusted return expectations, resulting in a significant tilt towards ETH. The performance of the options market confirms this trend. Deribit data shows that the open interest of ETH call options has increased by 35% over the past week, well above BTC's 18%. The proportion of call options with a strike price above $2,500 has increased significantly, reflecting the market's optimistic expectations for ETH's short-term trend. Market structure and capital flows On-chain data analysis revealed the source of funding for this rally. The Chainalysis report noted that the volume of stablecoins flowing into exchanges has increased by 45% in the past two weeks, with about 60% of them going to ETH and related tokens. This pattern of flows is similar to the early days of the bull market in 2021, but with a marked increase in institutional participation. Changes in holdings are also worth paying attention to. According to CoinShares statistics, digital asset investment products have seen net inflows for five consecutive weeks, of which Ethereum funds have increased to 38% from 25% at the beginning of the year. Institutional investors seem to be adjusting their position structure and increasing their allocation to Ethereum. Exchange ETH balances fell to a three-year low. CryptoQuant data shows that ETH reserves on major exchanges decreased by 12%, while the amount of ETH locked by smart contracts increased by 8%. This change in the structure of supply and demand has provided support for prices, especially as leverage in the derivatives market remains relatively restrained. Risk Factors and Technical Observations Despite the high market sentiment, the potential risks cannot be ignored. The futures funding rate has risen to a high level of 0.15%, indicating that leveraged long positions are accumulating. According to historical data, when the funding rate exceeds 0.1%, the probability of a short-term correction in the market increases by 60%. Technical indicators show that ETH has entered overbought territory. The daily RSI broke through 70 and the weekly MACD formed a golden cross, which is a technical pattern that is instructive in the medium-term trend. It should be noted that there is significant psychological resistance near $2,200, where the 2018 highs and the 50% Fibonacci retracement of the 2022 pullback coincide. On-chain earnings selling pressure could be a short-term constraint. IntoTheBlock's analysis notes that about 35% of ETH holdings at the current price are profitable, close to the historical average profit-taking threshold. If the price continues to rise rapidly, this part of the chips may form supply pressure. The underlying logic of market evolution There is an essential difference between this round of market and previous bull markets. The rally in 2021 was largely driven by retail liquidity and DeFi innovation, while the current market reflects more of a reassessment of the value of crypto asset allocation by institutional investors. The involvement of traditional financial institutions such as BlackRock has changed the structure of the market, making price volatility more fundamentally supportive. The maturation of the Ethereum ecosystem is also a key variable. According to the Electric Capital Developer Report, the number of monthly active developers on Ethereum is more than 3 times that of other smart contract platforms combined. This developer advantage is being translated into real-world applications, with innovations in areas such as DeFi, NFTs, and gaming continuing to emerge. The subtle changes in the regulatory environment cannot be ignored. The softening of the SEC attitude towards the properties of Ethereum securities in the United States, as well as the gradual implementation of the MiCA framework in Europe, have cleared some obstacles for institutional funds to enter the market. The implications of such a policy shift could be more far-reaching than technological upgrades. The market is always looking for a new equilibrium in the midst of change. Ethereum's strong performance is both a fundamental improvement brought about by a technological upgrade and a revaluation of funds caused by changes in regulatory expectations. When technological innovation resonates with financial demand, it often leads to the most sustainable market trends. Investors need to stay awake in this complex environment, not to miss opportunities, and not to blindly follow the herd. $ETH @aixbt_agent #KAITO @KaitoAI @GiveRep @fantasy_top_