Ethereum is sounding the clarion call for a counterattack? Why did the 40% increase ignite the market?

Written by: Jeffrey Ding, Chief Analyst of HashKey Group

The strong rise in the price of Ethereum (ETH) may be the most popular thing in the industry recently. HashKey Exchange market data shows that the price of Ethereum has soared from $1,800 to a high of $2,600 in the past week, an increase of more than 40%. Why did Ethereum soar at this point in time? We believe that this is a concentrated outbreak after the accumulation of market sentiment, and it is also the result of the synergy of technology iteration, capital rotation and ecological construction.

Coincidentally, when HashKey Exchange officially launched the Ethereum ETF staking service on April 10, the price of Ethereum was hovering at a year-to-date low of $1,400. After the staking service was launched, the price of Ethereum happened to start a new rising cycle. I had predicted at the time that the final landing of the Ethereum ETF staking may become a key variable to leverage a new round of incremental funds in the market. Its impact will go far beyond the Ethereum market itself, and will bring new opportunities to the institutionalization process of the entire crypto market, the compliance of PoS assets, and the maturity of the Staking market. This change may make Ethereum an important alternative asset class in the global capital market, attracting a large amount of long-term funds to enter the market, and at the same time have a profound impact on the price of Ethereum and the entire Staking ecosystem. Staking services are becoming a "siphon pump" to attract capital influx.

A more direct factor is that Ethereum's Pectra upgrade also brings momentum to the coin price. However, it must be said that each previous Ethereum upgrade (such as the Cancun upgrade) usually reflects price expectations 1-3 months in advance, and can bring at least double the price increase in the short term, but the market did not show a significant increase before the Pectra upgrade, and the short-term increase after the upgrade was only about 25%. So we prefer to define it as a compensatory increase triggered by extremely depressed market sentiment.

Why compensatory increase? First, Bitcoin broke through the $100,000 mark and broke through the previous high, forming a short-term bull market. Ethereum's exchange rate ratio (ETH/BTC) dropped to around 0.02, triggering the market's consensus on the underestimation of Ethereum's price, and funds will spread from Bitcoin to Ethereum and altcoins. In addition, a technical analysis of Ethereum's price found that during the decline in Ethereum's price in early April, the RSI indicator showed "oversold but not new lows" (generally speaking, an RSI value below 30 indicates that the market is oversold and may rise soon), suggesting that the market selling pressure is close to exhaustion and the price is about to reverse. The derivatives market has become a market amplifier. When the price of Ethereum began to rise, short positions were forced to close, forming a cycle of "price increase - short covering - price rise again". These factors have strongly promoted Ethereum to trigger a rebound.

What will Ethereum's rise bring? The most amazing thing about Ethereum is that the price increase is not only a result, but also a fuel to promote ecological upgrades. The rise in Ethereum price has pushed up the gas fee unit, increased the staking income, and attracted more people to participate in maintaining network security. At the same time, the loanable amount of the DeFi protocol has expanded, TVL (total locked value) has increased, and more funds have circulated in the ecosystem. The rising interaction costs of the main network have forced developers and users to migrate to more efficient and low-cost solutions, objectively promoting the evolution of underlying technical architectures such as Layer2 networks and re-staking mechanisms. Even the NFT field has stimulated a new wave of creator economy and digital identity investment due to the wealth effect of Ethereum pricing units. The rise in coin prices has brought about a multi-dimensional resonance of the Ethereum ecosystem from the financial layer to the technical layer to the application layer.

As Dr. Xiao Feng, Chairman of Wanxiang Blockchain and Chairman and CEO of HashKey Group, said, 2025 will be the starting point of Web3's "1995 moment". Ethereum in 2025 is at the critical point of the integration of blockchain and the real world. This 40% surge will be the prelude to a new era - when technological innovation, capital flow and mature infrastructure resonate, the golden decade of the value Internet may be knocking on the door.