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

Words: Haotian

The sharp rise in Ethereum's $ETH this time, many people have come back and asked whether it will be related to the recent Pectra upgrade? The answer is probably not.

The Pectra upgrade is more like the "finishing touches" of the Cancun upgrade, with low-level optimizations and details rather than breakthrough technological innovations.

From a technical point of view, the four EIPs included in the Pectra upgrade all point in the same direction: making Ethereum more stable and efficient. EIP-7044's state expiration standardization, EIP-7524's redefinition of fuel limits, EIP-7697's transaction pipeline optimizations, and EIP-6789's difficulty adjustment improvements are typical "tinkering" upgrades that address some of the edge issues left over from the Cancun upgrade.

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

In the past few months, Ethereum has indeed experienced a round of "concentrated firepower"-like doubts: layer2 liquidity dispersion has been amplified into ecological splitting, performance comparison with Solana has been interpreted as a failure of the technical route, and the expansion of layer2 ecological applications has not been as expected, and the stacking of technical narratives such as restaking, modularization, and zk cannot be captured by value, etc.;

While all the focus is on Ethereum, some key facts are overlooked: the total DeFi lock-up value 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 developing primarily in the Ethereum ecosystem.

With too much fundamentals, it is not as bad as the market sentiment reflects.

And institutional investors clearly see through this emotional imbalance. The most typical example is Abraxas Capital's huge purchase of 242,652 ETH (about $561 million). In addition, during the period from May 9 to 14, there was also a significant increase in large-value ETH transfers (>$1M), and the ETH balance of institutional-grade wallet addresses increased significantly, which indicates that there is a planned large-scale institutional positioning.

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

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