The Pectra upgrade for Ethereum has been highlighted as a pivotal factor behind the cryptocurrency’s remarkable price increase of 140% in recent months. Digital asset bank Sygnum has pointed to three primary drivers of this surge: fundamental enhancements to the Ethereum network, supply constraints due to increased staking, and a boost in institutional demand.
In contrast to Ethereum’s impressive performance, Bitcoin has only seen a 15% increase, while Solana has experienced a 42% rise within the same timeframe. The smooth execution of the Pectra upgrade has bolstered Ethereum by implementing significant staking features and scaling improvements, thereby laying down strong technical foundations for future price appreciation.
Political developments have also played a role, notably the crypto-friendly regulatory climate established during the Trump administration, which has encouraged institutional capital to flow into the market. Notably, Exchange-Traded Funds (ETFs) and Digital Asset Treasuries have collectively acquired 8.4% of Ethereum’s market capitalization. Spot Ethereum ETFs alone have gathered approximately $27.73 billion, while Digital Asset Treasuries maintain a holding of $16.02 billion, resulting in significant supply absorption from traditional financial markets.
The regulatory landscape for Ethereum has seen significant progress as well, with the SEC’s clarification in May 2025 affirming that staking services do not qualify as securities offerings. This has alleviated previous regulatory uncertainties, prompting a surge in ETF inflows after a period of subdued institutional interest following the launch of ETFs in July 2024.
Research from Coinbase indicates that staking services have removed nearly 30% of Ethereum’s supply from active circulation. Concurrently, reserves on exchanges have dipped below previous cycle lows, setting the stage for a potential supply shortage as demand for Ethereum rises.
Shivam Thakral, CEO of BuyUcoin, added that decentralized finance (DeFi), real-world assets, and rollup activities are also gaining momentum beyond the initial ETF-driven demand. These practical use cases create a more sustainable source of demand that is less dependent on speculative trading.
Sygnum’s analysis indicates a negative supply shock is unfolding, reflected by declining inventory figures from exchanges. This dynamic suggests that Ethereum is well-positioned for further price appreciation as long as there are no major economic or regulatory disruptions.
According to prediction markets like Myriad, sentiment is cautiously optimistic regarding Ethereum’s outlook, with roughly two-thirds of users anticipating prices to exceed $5,000 within the year. Currently, Ethereum is trading at $4,427, reflecting a respectable daily gain of 2.4%.
