Ethereum (ETH) is on fire, and it’s not just because of the latest upgrade

A weekly insights report released on May 14 by Bybit, the world's second-largest crypto exchange by trading volume, says ETH is outpacing Bitcoin (BTC)

Ethereum (ETH) has been outpacing Bitcoin (BTC) and attracting attention from traders and investors, according to a weekly insights report released on May 14 by Bybit, the world’s second-largest crypto exchange by trading volume. The report, which was created with analytics partner Block Scholes, provides a clear picture of what’s powering ETH’s latest surge and also that it is the start of something bigger.

The report says that ETH’s 20% single-day price on May 7 was the strongest performance in years. While the recent Pectra upgrade aimed at improving Ethereum’s core infrastructure, which played a big part, it’s not the only reason behind it.

One of the key factors was the liquidation of over $500 million in ETH short positions. As bets were wiped out, ETH’s price surged. At the same time, the broader market was relieved from global tariff tensions, which were giving crypto assets more room to jump.

But Bybit’s analysis delves deeper, uncovering a transformation within Ethereum itself. Co-founder Vitalik Buterin recently gave a new roadmap that focuses on boosting network scalability and simplifying Ethereum operation. With a goal of up to 100x throughput, Ethereum’s future could be faster, leaner, and more developer-friendly while keeping decentralization intact.

ETH Didn’t Just Outperform BTC in Price

The report also notes that ETH has stolen the spotlight from BTC in terms of price performance. However, a broader look at trading activity and sentiment shows that traders are rotating out of Bitcoin and into Ethereum.

The ETH/BTC ratio has been steadily rising since May 7, indicating that traders are placing greater relative value on ETH compared to BTC. This coincides with a period of sustained rally in ETH, contrasting with Bitcoin’s lackluster performance in the past week.

In the options market, the numbers speak for themselves. On May 8 alone, ETH traders placed $60 million more in call options, betting on further gains in the world’s second-largest cryptocurrency. In contrast, Bitcoin’s derivatives market remained quiet without any major spikes in bullish or bearish sentiment.

Funding rates, which measure the premium or discount for funding futures compared to spot markets, also shifted in favor of ETH. At the same time, the skew measures trader positioning, which flipped dramatically. In April, there was a 20% skew towards puts, indicating greater interest in bearish positions. But in early May, calls dominated, with a 10% skew toward bullish positions.

This implied volatility, especially in short-term ETH options, has climbed as well. It shows that traders expect bigger moves from now on. All signs suggest that Ethereum is not only back, but leading the market in momentum recently.

So, will the rally last? That remains to be seen. Crypto markets are famously volatile, and nothing is guaranteed. But for now, Ethereum is enjoying the spotlight which is fueled by smart upgrades, confident leadership, and positive trader sentiment.