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Key Takeaways:
ETH has surged 43% in May 2025, outperforming Bitcoin and other major altcoins.
The rally is driven by the Pectra upgrade, which improves scalability and usability, along with strong institutional flows via ETFs.
Over 60% of ETH addresses are now in profit, and ETH supply on exchanges is dropping, indicating potential for further gains.
Ethereum (ETH) has been experiencing a remarkable resurgence, outperforming Bitcoin (BTC) and the majority of its other altcoin counterparts throughout May 2025. After lagging behind the broader markets for many months, ETH has climbed more than 43% since the beginning of May, trading at around $ 2,577 as of May 15.
May is ETH's best monthly performance since November 2021. In comparison, BTC increased by approximately 10.7%, and Solana (SOL) gained 20.6%. Ethereum's recent price action is not merely a technical bounce but clearly shows substantial network changes, surging institutional demand, macroeconomic tailwinds, and on-chain signals.
The primary driving force behind Ethereum's rebound is the successful launch of the long-awaited Pectra upgrade, which was deployed on May 7, 2025. The Pectra upgrade was the most significant revamp of the blockchain since the Merge in 2022, and consists of several Ethereum Improvement Proposals (EIPs) to improve usability, scalability, and the validator experience.
EIP-7702: Adds temporary smart contract functionality to user wallets, allowing transaction batching and enabling the use of alternative fee tokens.
EIP-7251: Increases the maximum validator stake amount from 32 ETH to 2,048 ETH, to further incentivize validator consolidation and scalability.
EIP-7002: Improves staking by allowing withdrawals to be made directly from the execution layer, streamlining the exit process.
These upgrades will benefit both the use of the Ethereum network and network performance, making it an attractive opportunity for developers, institutions, and retail investors.
According to analyst Ali Martinez, Ethereum has officially flipped into positive momentum based on the 160-day MVRV (Market Value to Realized Value) ratio data from Glassnode.
The MVRV metric indicates whether ETH tokens are undervalued or overvalued based on the average price at which they were last moved. The MVRV chart has shifted to indicate an upward movement, revealing an uptick in investor sentiment and profitability among those who hold ETH. Over 60% of Ethereum addresses are currently in profit, almost double the 32% a month ago.
A rising MVRV ratio often precedes long rallies and altcoin momentum phases. Historically, when ETH does well and outperforms BTC, the trend is usually followed by a bull market in the larger altcoin space.
Ethereum’s rally is fueled by the robust institutional involvement, especially through Ethereum spot ETFs. According to SoSoValue, Ethereum spot ETFs experienced a net inflow, none of the nine approved ETH spot ETFs experienced an outflow. The net inflow for ETH spot ETFs totaled $63.47 million on May 14.
BlackRock's ETHA ETF led the charge, which had a net inflow of $57.6 million in just one day. Cumulatively, the ETF had a net inflow of $4.26 billion, signifying strong belief in Ethereum's long-term potential from institutional investors.
While traditional investors dumped approximately $10.83 million in Ethereum over the same time, institutional buyers easily outpaced this. Another bullish signal is that ETH balances on exchanges have dropped to 19.10 million, indicating decreased selling pressure and strong holding sentiment.
Another undervalued growth driver is Ethereum's leadership in the real-world asset (RWA) tokenization space. According to RWA.xyz, this segment has grown over 10% in the last 30 days, reaching $22.1 billion in total value. Ethereum dominates the RWA tokenization space with a total value of $6.9 billion in tokenized assets, corresponding to a 58% market share.
Financial giants like BlackRock are developing the tokenization of existing bonds, real estate, and other traditional assets. This trend should continue to grow as global finance adopts blockchain.
Sean Dawson of Derive.xyz now projects a 20% chance that ETH prices exceed $4,000 by year-end, up from just 9% a week earlier. The probability of prices falling below $1,500 by Christmas has dropped from 40% to just 15%, indicating bullish market sentiment.
Glassnode data and derivatives market activity, including positive funding rates across exchanges, imply the momentum is with Ethereum. Suppose we start to see institutional and traditional retail investors rotate into ETH. In that case, the $3,000 mark will be breached earlier than expected and perhaps trigger a new bullish cycle for both Ethereum and altcoins.
Also Read: Ethereum Upgrades That Are Shaping the Future of Blockchain
Ethereum’s outperformance in May 2025 marks a pivotal turning point. With its network upgraded for better performance, institutional capital flowing in, and macro conditions improving, ETH seems ready to go higher. While the journey to reclaim its all-time high of $4,105 remains ongoing, all signs suggest that Ethereum’s comeback story is just beginning.
