Ethereum (ETH) price prediction is turning bullish after a 95% rebound, but can ETH really hold above $2,600

The price of Ethereum (ETH) has surged in recent days, continuing a strong rebound from lows reached earlier in 2024. The second-largest cryptocurrency is now trading at levels last seen before the U.S.-induced trade unrest that began late last year.

The recovery in ETH has been driven by several factors, including easing macro uncertainty, a growing sense of optimism about Ethereum’s long-term role in the digital economy, and the recent Pectra upgrade, which introduced performance improvements aimed at enhancing network efficiency and transaction speed.

The upgrade went live when ETH was priced near $1,700, and its rollout has coincided with the broader price recovery, further reinforcing market confidence.

The pace of the rally so far has been measured, with trading volumes building steadily and no indication of speculative excess or leveraged positioning.

Let’s take a closer look at the latest developments and their implications.

Bernstein highlights three key drivers

According to a client note by research and brokerage firm Bernstein, led by analyst Gautam Chhugani, Ethereum’s bounce is being driven by three overlapping forces that mark a departure from its previously lagging performance.

Until recently, Ethereum had been lagging both Bitcoin (BTC) and faster layer 1 competitors. The ETH to BTC ratio dropped by around 45% over the past year, as investors favored Bitcoin for its perceived store-of-value role, especially following the approval of spot Bitcoin ETFs. At the same time, retail attention shifted toward newer chains offering lower fees and faster transactions. In Bernstein’s view, this left Ethereum stuck in the middle—it was no longer the fastest platform for everyday users, nor did it command the same level of institutional confidence as Bitcoin.

However, this context is now beginning to change. Bernstein notes that Ethereum is starting to benefit from increased focus on stablecoin usage, real-world asset tokenization, and the maturation of layer 2 networks.

Stablecoins and tokenized securities are gaining meaningful traction as tools for payments and settlement. Ethereum hosts more than half of the total stablecoin supply, positioning it as a natural settlement layer for these transactions. Among these stablecoins, Tether (USDT) and USDC are now used in products like tokenized bonds and equities.

Real-world tokenization, now valued at over $22 billion according to RWA.xyz, is also largely centered around Ethereum, with firms like BlackRock and Franklin Templeton spearheading deployment efforts.

The second major driver comes from Ethereum’s layer 2 ecosystem. While some have questioned whether these networks directly benefit Ethereum, Bernstein points out that several institutional-grade applications are beginning to emerge from platforms like Arbitrum, Optimism, and Coinbase-backed Base.

For instance, Base generated around $84 million in revenue last year from rendering services to institutions and developers. These layer 2 platforms still rely on ETH for settlement and gas, reinforcing the asset’s underlying economic utility.

Moreover, the recent acquisition of WonderFi by Robinhood to gain exposure to the layer 2 ecosystem suggests a broader shift in strategy among large brokers.

Given that WonderFi operates a layer 2 network and provides services for tokenized securities, this move could pave the way for brokers to launch products like tokenized equities on Ethereum-compatible infrastructure.

The third factor is more market-driven. Over the past year, many hedge funds used ETH as a hedge within their portfolios, shorting it while remaining long on other assets such as Bitcoin or Solana (SOL), which applied consistent downward pressure on ETH relative to the broader market.

As the Ethereum narrative begins to align more closely with real-world adoption trends and institutional capital flows, many of those short positions are being closed. Bernstein sees this unwind as one of the forces contributing to ETH’s recent outperformance.

Overall, these observations suggest that Ethereum’s rise is being fueled not only by shifting sentiment but also by deeper structural changes in how the network is used and valued.

Pectra upgrade completed, next up is Fusaka

Ethereum is entering a new phase of development, marked by a renewed push toward scalability and real-world usability. This shift began with the rollout of Pectra, the network’s most important upgrade since the Merge in 2022.

Pectra brought several highly anticipated features, including a doubling of blob capacity for layer 2 networks, which helps reduce congestion and lower transaction fees. The upgrade also enables Account Abstraction, allowing users to pay gas fees in stablecoins such as Dai (DAI) and USD Coin (USDC).

Another major change is an increase in the maximum validator stake from 32 ETH to 2,048 ETH, rendering node operations more efficient for institutional participants.

With Pectra now live, developer attention has shifted to Fusaka, Ethereum’s next major protocol upgrade, which is expected by the end of 2025.

A central feature of Fusaka is Peer Data Availability Sampling, or PeerDAS