Author: Loyal E Guard Scof, ChainCatcher
Editor: TB, ChainCatcher
"What happened to Ethereum with a 40% surge in 3 days?" This topic recently topped the Douyin trending list, sparking heated discussion. The rapid price increase ignited market sentiment and made many people start fantasizing about the bull market's return. However, one surge does not equal the start of a new cycle. By reviewing the background and sorting out the logic, we should ask: Is this rebound driven by emotion or a trend reversal?
Strong Rebound Ignites Market, Emotion and Structure Resonating
Starting from early May, Ethereum's price continuously rose, breaking through from around $1,800 to over $2,500, with a surge of over 40% in just three days. This round of increase was not just a price recovery, but also an emotional outbreak. Previously, ETH had been weak for months, with market confidence low, but this wave of momentum seemed to ignite investors' passion overnight.
Douyin, Twitter, and KOL analyses emerged in unison, with voices ranging from "bull market is coming" to "changing positions and pulling up the market". Unlike previous moves purely driven by market expectations, this rise overlapped with multiple factors such as technical upgrades, ETF topics, and macroeconomic benefits, forming a structural resonance.
On-chain data shows funds are gradually flowing out of exchanges and into staking or long-term holding accounts. Ethereum's staking ratio has exceeded 28%, with most positions established at low levels, indicating long-term bullish expectations. Additionally, ETF's ETH lock-up quantity continues to grow, and although the proportion is still small, its symbolic significance for confidence is obvious. Sentiment is warming, funds are flowing, and the ecosystem is recovering - this rebound is not as simple as a shill.
Pectra Upgrade and Policy Signals Construct Fundamental Support
The core background of this rebound is Ethereum's mainnet completing the Pectra upgrade on May 7th, the most significant technical modification since the "merge". It introduced higher staking limits, account abstraction, and data processing optimization, lowering usage thresholds while improving verification efficiency and Layer 2 operating space. More critically, these changes improved user experience and provided more flexibility for institutions and developers.
On the eve of the upgrade, Vitalik published a blog proposing to simplify Ethereum to be as "easy to understand and use" as Bitcoin in the next five years. The foundation's internal reorganization also saw the new leadership team emphasizing "communication" and "actual user value", shifting from a technology-first to a user-oriented approach. These changes indicate that Ethereum is trying to shed its image of technical complexity and unclear direction, redefining its core advantages.
On the other hand, expectations for Ethereum ETF staking are heating up. BlackRock's discussion with the new SEC chairman has sparked anticipation of officially incorporating staking functions into ETFs. Although the SEC has not yet responded, the Hong Kong market has already opened up staking ETFs, and the institutional policy wind is changing.
On-chain fund movements also provide a more intuitive perspective. From May 8th to 11th, asset management company Abraxas Capital withdrew approximately 185,309 ETH from centralized exchanges, with a total value of about $399 million. In the days prior, the institution had also withdrawn 138,511 ETH, valued over $290 million. Within just one week, its cumulative absorption approached $700 million. This concentrated buying period highly coincides with ETH's technical upgrade and ETF staking expectations, and although the motives are unclear, the institution's proactive behavior itself has released a positive signal.
What Should E Guards Focus on Next?
Moving forward, what truly determines whether this momentum can continue is not how much it has risen, but how much it can retain. For "E Guards", the most important thing to focus on right now is not where the next high point is, but whether these key changes are actually implemented - after the Pectra upgrade, is the network truly more user-friendly? Have wallet interactions, new user onboarding, and developer experiences substantially improved? Ethereum is not lacking in technology, but history tells us that if an upgrade cannot be converted into real user retention and development activity, it's merely a victory at the code level.
Another aspect that cannot be ignored is the progress of the ETF staking mechanism. BlackRock's actions have already provided sufficient hints, but a real statement has not yet arrived. When will the US follow Hong Kong, and what does this mean for ETH? This is a window period for observing policy tendencies. At the same time, don't forget to look at on-chain fund movements: Are exchange balances continuing to decrease? Is the staking amount still steadily increasing? These are the true manifestations of confidence.
Two more aspects might determine whether ETH can outline an "independent market": one is whether the futures market shows signs of overheating, as surging funding rates often mean short-term risks are accumulating; the other is whether it has truly established its position as a "financial-grade infrastructure". Against the backdrop of global stablecoin and RWA acceleration, only systems like Ethereum with high availability and attack resistance can potentially become underlying platforms carrying trillions of dollars in assets.
Despite current favorable data, whether Ethereum has truly entered a bull market cannot be easily concluded. On one hand, technical indicators suggest the market might be overheated in the short term, with RSI at high levels and some futures positions showing pullback pressure. On the other hand, from historical experience, Ethereum has often seen "buy the rumor, sell the news" scenarios after upgrade benefits, and technical progress does not always bring sustained price increases.
Moreover, Ethereum itself faces structural challenges. While Layer 2 scaling has improved efficiency, it has also weakened mainnet transaction activity, impacting ETH's revenue model. Competitors like Solana have already posed substantial threats in speed, fees, and user experience. Although ecosystem diversity is an advantage, complex governance and slow decision-making have weakened execution capabilities.
Notably, while the BTC ETF had a small net inflow yesterday (about $5.2 million), the ETH ETF experienced about $17 million in net outflows. Despite this, ETH's trend was not affected and continued to rise independently, with price disconnected from fund flows, sparking market speculation about "position changing" or even "Asian market dominance".
More importantly, ETH's current trend is still strongly influenced by the macro market. The Federal Reserve's interest rate cut expectations, the recovery of US small and mid-cap stocks, and Bitcoin's strong rebound have together created a favorable external environment. Data even shows that ETH's correlation with the Russell 2000 has recently increased significantly. This indicates that ETH's current rise might be part of the overall risk asset "sector rotation" rather than an independent bull run.
Conclusion
Ethereum is at a delicate critical point. It is transforming, with technical updates, institutional loosening, and ecosystem reorganization all progressing. However, whether it can enter the bull market channel still requires more time and factual verification. In the short term, this looks more like a structural repair market. A true bull market needs continuous fund inflow, a clearer policy environment, and Ethereum's ability to fulfill its transformation promises.
The market has offered an expectation, but whether the "E Guards" can truly turn the tide depends on whether ETH can go further and stand more steadily.
