⚡ Hey, friends, the recent strong surge in ETH has led many to associate it with technical benefits and focus on the Pectra upgrade.
But to be honest, Pectra feels more like a logistical patch for the Cancun upgrade. From EIP-7044 to 6789, it is more about enhancing the stability and efficiency of the chain, which belongs to lower-level optimizations and is unlikely to become the core catalyst for a market sentiment explosion.
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1. Positioning of the Pectra upgrade: technical consolidation rather than a market catalyst
The Pectra upgrade is another important update following the Dencun upgrade in March 2024, combining the Prague (execution layer) and Electra (consensus layer) hard forks, with a total of 11 patches (EIPs), focusing on technical consolidation.
Four key proposals (EIP-7044 / 7524 / 7697 / 6789):
● EIP-7044 (state management upgrade): focuses on state expiration, simply put, it allows Ethereum to periodically clean up historical data to avoid state bloat that slows down the network.
● EIP-7524 (fuel model reconstruction): optimizes the current gas model, preparing for a more flexible and cost-effective dynamic gas in the future.
● EIP-7697 + EIP-6789 (transaction pipeline and difficulty adjustment): together constitute a network stability enhancement plan.
This time, Pectra is not about creating new stories, but about solidifying the foundation. It paves the way for Verkle Trees and stateless clients, which may be appealing to tech enthusiasts, but the market sentiment is largely indifferent.
Simply put, Ethereum continues to quietly build its infrastructure; do not rush to find a narrative. The less noticeable the upgrade, the more solid the value.
2. Imbalance in market sentiment: Ethereum has been excessively influenced by FUD
In the past few months, Ethereum has indeed faced concentrated market skepticism (FUD), which has amplified its short-term issues:
Layer 2 liquidity is dispersed, interpreted as a signal of ecological division. The technical roadmap has been compared to Solana, suggesting it is lagging.
There are also various new narratives such as Restaking, modularity, zero-knowledge proofs (zk), which are talked about a lot but implemented little, and their value has not been realized.
These voices have created a situation where market confidence in Ethereum plummeted. However, the reality is not that bad; Ethereum's foundation is quite solid.
Total locked value (TVL) in DeFi remains stable at $119 billion, showing that ecological funds have not significantly drained. The Cancun upgrade helped reduce Layer 2 costs, and user and developer activity has rebounded.
The continuous inflow of funds into Ethereum spot ETFs shows that institutions still have a positive outlook on its long-term potential; new narratives such as RWA (real-world asset tokenization) and PayFi (payment finance) are mainly thriving within the Ethereum ecosystem, indicating significant potential.
In short, it was a case of market sentiment being misjudged; Ethereum is not that bad, and there are actually many opportunities. Don't let FUD blind you.
3. Institutions buying the dip: the real driving force behind the price increase
Behind the price increase, capital flow provides more intuitive evidence. Recent on-chain data and market dynamics show that institutions have great confidence in Ethereum.
The massive purchase by Abraxas Capital, which acquired 242,652 ETH (approximately $561 million), shows a strong confidence in the long-term value of Ethereum.
From May 9 to 14, the number of individual ETH transfers exceeding $1 million significantly increased, indicating that large holders and institutions are taking advantage of the dip to accumulate.
Data from on-chain platforms like Nansen and Glassnode also show that institutions are accumulating more ETH in their wallets.
These signs indicate that institutions have quietly picked up chips at the bottom while market sentiment was low and FUD was rampant. For ordinary investors, following institutional moves is usually a good idea because institutional actions often serve as a barometer for market trends. There is a high probability that the market will rise afterward. What do you think?
The recent strong rise of Ethereum is not closely related to the Pectra upgrade; it is more about the market's value correction. The previous FUD was too scary, and smart money has seen through these emotional fluctuations, taking advantage of the panic to buy at low prices. The fundamentals are actually quite stable; it is time to re-evaluate Ethereum.
