#ETH rice has underperformed other coins in the current bull run, but gas fee sponsorship could attract developers and traders back to the network.
Ethereum’s upcoming Pectra upgrade is expected to improve staking efficiency, which could increase demand for ETH.
Data shows that ETH price has bottomed. Will Pectra’s narrative reignite bullish momentum?
Ether since 2024
ETH
$1,813
More of a meme than a market mover. Unlike most of its competitors, ETH has yet to reclaim its all-time high of $4,870 set in November 2021 and has often underperformed other coins even in weak altcoin markets. Currently, ETH is trading at $1,813, down 56% from its December 2024 peak.
Despite the dismal price action, it may be premature to dismiss Ethereum as a relic of the past. The network continues to evolve, and the upcoming Pectra upgrade on May 7 could reignite market interest.
By addressing long-standing UX challenges and improving staking mechanisms, Pectra could help Ethereum close the competitive gap with competitors like Solana and Bina. More importantly, it could be the catalyst that pushes Ether’s price back into the spotlight.
What are Pectra’s key upgrades?
The Pectra upgrade introduces 11 Ethereum Improvement Proposals (EIPs) designed to enhance Ethereum in three dimensions: scalability through Layer-2, user experience (UX), and staking efficiency.
Scalability remains Ethereum’s most persistent challenge, with critics arguing that a monolithic Layer-1 architecture will always outperform a modular Layer-2 architecture. However, Pectra’s improvements in UX and staking could have a truly meaningful impact on Ethereum and ETH’s market dynamics.
The most prominent upgrade is EIP-7702, which allows external accounts (regular user wallets) to temporarily act like smart contracts. This unlocks features such as fee sponsorship and paying gas fees with tokens other than Ether.
These enhancements could significantly improve Ethereum’s user-friendliness, lower barriers to entry, enable DApps to sponsor gas fees for new users, and improve wallet functionality with less friction. This is particularly important for onboarding non-technical users in gaming, payments, and mobile applications, which continue to face barriers due to poor user experience.
Another positive is that the option to pay gas fees with tokens other than ETH will not weaken ETH’s position in the network. At the protocol level, validators will continue to receive fees in ETH, while payment processors will have to convert fee tokens to ETH.
On the staking side, EIPs 7251, 6110, and 7002 will also bring significant changes. Allowing validators to hold up to 2,048 ETH instead of just 32, and significantly simplifying the process of joining and leaving validators.
Validators will be able to stake up to 2,048 ETH instead of just 32, and the joining and exiting process will be much smoother. These changes are particularly important for institutional validators. As disappointed institutions begin to sell off their ETH holdings, this upgrade could spur large players to re-engage.
Will the Pectra upgrade affect the price of ETH?
The price of ETH reflects the market's expectations of its future demand, which is mainly influenced by its use to pay gas fees and its supply dynamics. The Pectra upgrade aims to strengthen both sides of this equation: increasing demand while reducing available supply.
On the demand side, a significantly improved user experience can attract mainstream users and developers, thereby accelerating adoption and on-chain activity.
On the supply side, a streamlined and institution-friendly staking mechanism could lead to more ETH being locked in validating nodes, tightening the circulating supply and potentially putting upward pressure on prices.
In addition, if more innovative wallet features can truly drive user adoption, the increase in transaction throughput will also accelerate the destruction of ETH, further reducing supply.
Data shows that Ethereum is currently experiencing one of its lowest destruction periods ever, at around 70 ETH per day, compared to 2,000 to 4,000 ETH destroyed in 2024. A resurgence in destruction activity could push up the destruction rate, thereby increasing deflationary pressures, which would support prices.
Can Pectra trigger a reversal in ETH price trends?
Pectra will add powerful features to Ethereum, but its impact may take time to be seen. In the meantime, the upgrade may provide the information needed for ETH to regain market momentum.
From a technical perspective, the setup looks favorable. ETH appears to have formed a local bottom, with the weekly RSI (usually a reliable reversal signal) breaking out of the downtrend on April 20.
This marks the end of the ongoing correction since December 2024, which at one point wiped out 66% of ETH's value. A new uptrend may be forming, but will Pectra be its trigger?
