After months of underwhelming performance, investors are now spotting indications of a possible resurgence for ether, which is the second-biggest cryptocurrency. This optimistic shift can be attributed to a recent enhancement of the Ethereum network along with an increased interest among investors in high-risk investments.
Ethereum has surged by 45% this month, putting it on course for its strongest monthly showing since November, where it saw an increase of 47.8%, as reported by the Dow Jones Market Data. By contrast, Bitcoin only advanced by 10.7% year-to-date, whereas Solana—one of Ethereum’s primary rivals—rose by 20.6% over the same period in May.
That represents a considerable change from earlier this year and late last year, when ether was trailing both bitcoin and solana. The token
didn’t attract
As much institutional focus as Bitcoin received, the Ethereum blockchain encountered significant rivalry from competitors such as the Solana platform.
Certainly, ether continues to have a considerable distance to cover, since the cryptocurrency was trading at 37% less than its peak value of $4,105.9 set in November 2021. In contrast, bitcoin was only 5% beneath its highest point achieved in January. By this time, bitcoin had gained 11.7%, whereas ether had dropped by 20.7%.
The most important driver of ether’s recent strength might be the completion of Ethereum’s
The highly anticipated Pectra update was released last week.
According to Alex Cheung, an over-the-counter trader at crypto brokerage firm Abra Prime, this represents the most significant update to the blockchain since 2022. This enhancement aimed to enhance user interaction and establish a foundation for upcoming improvements, enabling Ethereum to operate more efficiently with lower costs and quicker processing speeds as transaction volumes increase.
The cryptocurrency market appears to be responding positively to the Pectra upgrade, according to recent market data. Before the Pectra update on May 7, the ETH/BTC ratio was close to a five-year low at about 0.018; however, this figure climbed to as much as 0.025 on Tuesday—the highest point since March 9. Additionally, the open interest in ether derivative products, which represents the total volume of unfulfilled contracts, increased by 21%, reaching $25.8 billion on May 8—a day after the implementation of the Pectra upgrade—indicating heightened engagement within the market.
Furthermore, the funding rates for ether perpetual contracts became positive across nearly all derivative exchanges on May 7. These funding rates represent periodic payments made between traders who have entered into perpetual futures contracts. A shift to positive rates indicates that those with long positions—expecting the price to rise—are paying a premium to those with short positions. This suggests optimistic market sentiments.
Yet, the modifications introduced by the Pectra update might not suffice to drive ether’s recovery, according to Anthony Rousseau, who leads brokerage solutions at TradeStation. He contends that ether’s resilience was largely due to investors flocking towards underpriced assets as risk appetite resurged in the marketplace.
“That was more of a mean-reversion trade as funds moved towards more undervalued assets,” Rousseau stated.
Advancements in trade discussions between the U.S. and China during the weekend sparked increased interest in riskier assets throughout various markets. On Monday, both equities and cryptocurrencies experienced gains, with the Nasdaq Composite seeing particular strength.
exiting a bear market
, following the U.S. and China
reached a deal
To reduce tariffs on one another for a period of 90 days.
The stocks were primarily up on Tuesday.
With the S&P 500 becoming positive for the year following significant losses from the previous month, which were incurred after President Donald Trump announced extensive tariffs on April 2.
Given this scenario, ether has garnered increased interest since the Ethereum blockchain continues to dominate smart contract activities across various blockchains even though ether’s price remains slow. As reported by CoinGecko, Ethereum facilitates approximately half of all smart contract actions throughout all blockchains, with the overall value locked within the network amounting to $63 billion. These smart contracts employ scripts that automatically carry out an agreement once its stipulated criteria are satisfied.
The strong performance of Ether probably indicates good prospects for other minor cryptocurrencies as well.
“Data from the past indicates that when Ethereum shows stronger performance compared to Bitcoin, other alternative cryptocurrencies are likely to see a phase of better returns,” observed Joel Kruger, a market strategist at LMAX Group. Here, “altcoins” generally refers to cryptographic coins besides Bitcoin.