Recently, the cryptocurrency market has been hit by severe volatility.
Bitcoin reignited market enthusiasm, with prices rising back to $100,000.
As the leader of cryptocurrencies, Bitcoin's rise has driven market expectations for other coins.
Recently, the rapidly rising Ethereum has drawn attention.
In just a few days, Ethereum's price soared.
It rose over 15% in 24 hours and nearly 30% in a week, becoming a new star in the virtual asset market.
Its yield has outperformed Bitcoin—let's find out why.
What are the reasons for Ethereum's short-term surge?
First, let's briefly understand the market structure.
On just the 9th alone, approximately $1.2 billion in derivative positions were forcibly liquidated.
Most of this is short positions betting on a decline. In simple terms, it's short selling.
The short positions in Bitcoin have been liquidated for $340 million, while the short positions in Ethereum have been liquidated for $280 million—totaling approximately $620 million in liquidated shorts.
Investors betting on price declines were forcibly liquidated, triggering a buying spree that drove prices up.
Highly leveraged investors could not escape Ethereum's rapid surge.
Technical drivers of the price increase
Ethereum recently underwent a significant network upgrade called 'Pectra'.
This upgrade significantly reduced transaction fees, greatly improved network efficiency, and enhanced user experience.
Another important change is the adjustment of the staking mechanism.
Previously, validators needed to stake 32 ETH to earn rewards; now, each account can stake up to 2,048 ETH.
This creates a more favorable environment for institutions holding large amounts of ETH.
In summary, this upgrade lowered the entry barriers for institutions and optimized the compounding-based yield structure.
Institutional movements
Before Ethereum broke through $1,900, over 85,000 ETH (approximately $200 million) were withdrawn from Binance.
At almost the same time, over $1 billion in Tether was newly issued.
This indicates that institutions are preparing to enter the crypto market.
Institutional buying is also an important signal for retail investors, contributing to a positive outlook for Ethereum's long-term prospects.
Global economic trends
Global political and economic factors are also affecting Ethereum prices.
The US and the UK signed a trade agreement, easing economic tensions.
Trump's tariff policies are gradually easing, showing signs of normalization in global trade.
This has restored investor confidence in risk assets, which is also reflected in the crypto market.
Ethereum's prospects: Is it better than Bitcoin?
Technically, Ethereum has more potential than Bitcoin, making it more attractive for concentrated investments.
Many investors are considering whether now is a good time to buy.
Currently, Ethereum is trading at around $2,500.
In November 2021, Ethereum reached an all-time high of $4,800—now its price is about half of that peak.
According to CryptoQuant, such undervalued price levels have not been seen since 2019.
They claim Bitcoin prices are too high while Ethereum remains undervalued.
However, buying solely because prices are far below their peak carries risks.
Sharp increases are often followed by corrections, especially for leveraged traders.
Continuous attention to the effects of the upgrade, overall market liquidity, and regulatory risks is needed.
Events that drive price surges often fade quickly, leading to price declines.
This rise in Ethereum is not just a simple rebound.
Network upgrades, institutional capital inflows, and improved global investor sentiment have all contributed to an optimistic market outlook.
Due to being undervalued compared to Bitcoin, market attention further accelerated the upward trend.
Rising prices bring optimism, but they also lead to profit-taking, so risk management is crucial.
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