Ethereum (ETH) Steals Bitcoin's Thunder, Surging 45% This Month

Ether, the second-largest cryptocurrency, is stealing Bitcoin's thunder with a jaw-dropping 45% surge this month, its strongest performance

Ether (CRYPTO: ETH) has outperformed Bitcoin (CRYPTO: BTC) with a staggering 45% surge this month, marking its strongest performance since late 2021.

Ether (CRYPTO: ETH) has outperformed Bitcoin (CRYPTO: BTC) with a staggering 45% surge this month, marking its strongest performance since late 2021.

After months of lagging behind rivals like Bitcoin and Solana (CRYPTO: SOL), the second-largest cryptocurrency is roaring back.

After months of lagging behind rivals like Bitcoin and Solana (CRYPTO: SOL), the second-largest cryptocurrency is roaring back.

Fueled by a major blockchain upgrade, shifting investor sentiment, and fresh institutional interest, Ether’s rally could be signaling a potential turning point. Let's unpack the forces behind this crypto comeback.

Pectra Upgrade Sparks Ether Rally

The long-awaited Pectra upgrade, launched on May 7, set the stage for Ether’s rally. This overhaul, the largest since 2022, boosts transaction efficiency, slashes costs, and simplifies smart contract interactions.

The long-awaited Pectra upgrade, launched on May 7, set the stage for Ether’s rally. This overhaul, the largest since 2022, boosts transaction efficiency, slashes costs, and simplifies smart contract interactions.

Traders reacted swiftly: Ether’s price surged 21% within days, while open interest in derivatives soared to $25.8 billion. Alex Cheung of Abra Prime says the upgrade positions Ethereum to handle growing Web3 demand.

Traders reacted swiftly: Ether’s price surged 21% within days, while open interest in derivatives soared to $25.8 billion. Alex Cheung of Abra Prime says the upgrade positions Ethereum to handle growing Web3 demand.

Meanwhile, the ETH/BTC ratio rebounded from five-year lows, signaling renewed confidence. “Pectra makes Ethereum faster and cheaper,” Cheung adds. “That’s critical for mass adoption.”

Crypto Sentiment Surges After Tariffs Pause

Risk appetite surged globally after the U.S. and China paused tariff hikes, setting the stage for rallies in both stocks and crypto. The Nasdaq (NDAQ:NDAQ) fully exited bear market territory, while the S&P 500 is now set to close 2024 in the green.

This shift occurred after months of sluggish performance by U.S. equities, largely blamed on rising interest rates and the threat of a recession. However, the outlook changed drastically in April with the U.S. signaling a pause in the rate hikes.

This development sparked a broad-based rally, with tech stocks leading the charge. The world’s largest cryptocurrency, Bitcoin, also rose to fresh highs for the year.

Moreover, derivatives traders ramped up bullish bets on U.S. equities, anticipating further gains in the second half of 2024.

The shift in investor sentiment comes after a period of focus on Bitcoin, which traders believe has reached a critical juncture. As the world’s leading cryptocurrency stabilized near record highs, traders pivoted their attention to Ether.

Despite a 37% decline from its 2021 peak, Ether still has room for further gains, according to traders. This shift in focus is noteworthy, as it typically occurs when altcoins begin surging after Bitcoin plateaus in a bull run.

Institutions Prefer Ether ETFs Over Bitcoin

The recent launch of U.S. spot Ether ETFs in July has seen a strong start, attracting $577 million in inflows. This surpasses the pace at which Bitcoin funds attracted inflows late last year.

Institutions are increasingly betting on blockchain technology, particularly with the growing use of Ethereum for tokenizing assets.

BlackRock (NYSE:BLK) is spearheading this move, having now tokenized over $6.9 billion in real-world assets, including bonds and commodities, on Ethereum’s blockchain. These tokens are designed for use in decentralized finance (DeFi) applications.

“Institutions are now viewing Ether not merely as a currency, but as the fabric upon which institutions are building the next generation of financial products,” says Gautam Chhugani, an analyst at Bernstein.

DeFi platforms and Layer-2 solutions like Arbitrum are streamlining smart contract deployment and slashing gas fees, further attracting enterprises. This institutionalization separates Ether from Bitcoin’s “digital gold” narrative and positions it as a key technology.

Short Liquidations And Mega-Whales

A $437 million frenzy of short liquidations also supercharged Ether’s surge. As prices climbed rapidly, bearish traders were forced to unwind their positions, generating additional buying pressure.

At the same time, Ethereum’s “mega-whales” — traders holding at least 10,000 ETH — were busy gobbling up tokens, accumulating a total of 40.75 million ETH, the most since March 2024.

“When whales accumulate like this, it usually attracts interest from smaller traders,” said Joel Kruger, an analyst at LMAX. The ETH/BTC ratio’s return to 0.035 also lured investors who typically bet on an “altseason.”

In previous cycles, a sustained rally in Ether has often foreshadowed gains in smaller cryptocurrencies like Solana and Cardano (CRYPTO: ADA).

What's Next For Ether?

Almost 28% of Ether’s total supply is now locked in staking contracts, which yield around 3% annually. This reduces the amount of tokens available for trading, thereby amplifying price movements when demand spikes.

With the Federal Reserve set to cut interest rates later this year, the appeal of