Last week Ethereum had an incredible spike, skyrocketing pretty much 40% from just above $1,800 to $2,500. Such a noteworthy increase was possible largely due to a major network improvement. On a more general note, rising global trade tensions led to a resurgence in interest in the cryptocurrency. Analysts are pointing to Ethereum’s fundamentals as key to holding onto its recent gains. They warn that the cryptocurrency can’t be sustained on market emotion alone.

Rally Driven by Upgrade and Macro Optimism

Ethereum’s recent price surge can be attributed to much more than just speculation. After a successful implementation of this network upgrade, the Ethereum community’s confidence in Ethereum’s scalability and potential for mass adoption surged in the months that followed. Positive news from ongoing globe trade negotiations fueled generalized market optimism. U.S. President Donald Trump’s announcement of promising talks with China and a new, mini-trade deal with the U.K. helped lift all markets including both equities and cryptos.

"The ETH Pectra upgrade went live without issues, increasing confidence in Ethereum’s ability to scale and paving the way for further institutional adoption." - Sean Dawson

ETF Outflows and Crypto-Native Investors

Despite Ethereum’s price rally, on an overall basis, Ethereum spot funds continued to experience outflows totaling $55 million. That suggests that the surge wasn’t primarily driven by conventional institutional investors. This rally has arguably been fueled by crypto-native investors. These investors in many ways are more plugged into tech and market mood shifts than any other group. This new dynamic serves to further illustrate a key point, which may be creating a divergence in the behavior of retail vs. institutional investors in the Ethereum market.

Future Outlook and Bitcoin Comparison

Evolving forward, Ethereum’s bellwether performance will likely be more volatile than Bitcoin’s. This year’s shift in Ethereum’s prospects, as revealed by Derive’s models, is remarkable. We predict a 20% chance it will go over $4,000 by Christmas, up from only 9% last week. The cryptocurrency’s renewed dependence on sentiment and external factors may render it more vulnerable to market swings. On the first day, Bitcoin, Ethereum and Solana were all down.

"Without sustained institutional momentum and further clarity on regulation, we may see consolidation before any new all-time highs are tested." - Toledano