Ethereum‘s price surge this year reflects a confluence of institutional demand, a shrinking circulating supply and successful protocol upgrades. According to digital asset bank Sygnum, spot ETFs and corporate digital asset treasuries (DATs) have together claimed roughly 8.40% of Ethereum’s market cap — a demand shock that arrived alongside the Pectra upgrade and intensified staking activity.
Three main catalysts
The ETF and treasury wave: Spot Ethereum ETFs began trading in July 2024, but net inflows accelerated after a May 2025 SEC clarification that staking services do not constitute securities. Since then ETFs have accumulated $27.73 billion — about 5.31% of ETH’s market capitalization — while corporate DATs hold roughly $16.02 billion, according to SoSoValue and Ethereum Treasuries data. Sygnum highlights these flows as a key driver of the rally.
Pectra upgrade and fundamentals: The smooth rollout of the Pectra upgrade, which improved staking mechanics and scaling, has shifted investor sentiment. Sygnum notes Ether’s price rose roughly 140% since Pectra — outpacing Bitcoin (~15%) and Solana (~42%) over the same window.
Supply squeeze from staking and exchanges: Staking activity has removed nearly 30% of ETH’s supply from circulation, per a recent Coinbase report, and exchange reserves continue to fall. That negative supply shock, combined with rising demand, creates meaningful upward price pressure.
Broader adoption signals: Beyond ETFs and treasuries, DeFi activity, real-world asset tokenization and rollups are gaining traction — helping reframe Ethereum as core digital infrastructure rather than purely speculative asset. On the Myriad prediction market, roughly two-thirds of users expect ETH to top $5,000 this year. Per CoinGecko, ETH is currently trading near $4,427, up 2.4% in the past 24 hours.
Risk considerations: These catalysts are substantial but not guaranteed. Regulatory changes, macroeconomic shocks, a reversal in inflows or technical setbacks tied to upgrades could quickly alter the outlook. Readers should treat price targets as speculative and weigh portfolio risk accordingly.
Bottom line: Institutional capital (ETFs and DATs), the Pectra upgrade and a tightening supply base together explain Ethereum’s renewed momentum. If inflows persist and no major policy or macro shocks intervene, many analysts expect further gains — but the path will remain sensitive to regulation and market liquidity.
Source: Decrypt. Read the original coverage for full details.