Ethereum's Recent Surge: Analyzing the Factors Behind the Price Increase

According to PANews, the recent significant rise in Ethereum's price has prompted questions about its connection to the Pectra upgrade. However, the upgrade is more of a follow-up to the Cancun upgrade, focusing on underlying optimizations rather than groundbreaking innovations. From a technical standpoint, the Pectra upgrade includes four Ethereum Improvement Proposals (EIPs) aimed at enhancing Ethereum's stability and efficiency. These include EIP-7044 for standardizing status expiration, EIP-7524 for redefining fuel limits, EIP-7697 for optimizing transaction pipelines, and EIP-6789 for improving difficulty adjustments. These upgrades address minor issues left by the Cancun upgrade. The real driver behind Ethereum's price movement is a recovery from excessive fear, uncertainty, and doubt (FUD). In recent months, Ethereum faced intense scrutiny, with concerns about layer 2 liquidity dispersion, comparisons with Solana's performance, and unmet expectations for layer 2 ecosystem applications. Additionally, narratives around restaking, modularity, and zk technology failed to capture value. Despite these challenges, key facts were overlooked: DeFi's total locked value remains stable at $119 billion, the Cancun upgrade significantly reduced layer 2 costs, ETF inflows continue to strengthen, and new narratives like RWA and PayFi are primarily developing within the Ethereum ecosystem. Ethereum's fundamentals are not as dire as market sentiment suggests. Institutional investors have recognized this imbalance. A notable example is Abraxas Capital's substantial purchase of 242,652 ETH, valued at approximately $561 million. Between May 9-14, large ETH transfers exceeding $1 million increased significantly, and institutional wallet addresses showed a marked growth in ETH balances, indicating planned large-scale accumulation by institutions. Thus, if a rationale for Ethereum's recent surge is needed, it could be attributed to a rediscovery of its value after excessive FUD, with institutions seizing the opportunity to invest.