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Bitcoin dominated the crypto bull runs of 2015-18 and 2019-22, but both cycles eventually shifted capital into altcoins, creating ‘Altseason’—a period of altcoin outperformance. Ethereum, as the second-largest cryptocurrency, has typically led this rotation. However, the current cycle (2022-present) is unique, lacking a significant shift from Bitcoin to Ethereum, resulting in no sustained outperformance for ETH.
Historically, ETH surged from $8 to $1,448 between January 2017 and 2018, and from $738 to $4,800 by November 2021. Ethereum’s recent rally, beginning on May 7, 2025, raised questions about its 50% rise in a week and whether it signals an altseason. This report analyzes the current ETH breakout and contextualizes this rally against historical trends.
Historically, crypto cycles start with Bitcoin reclaiming its all-time high, leading to a euphoric phase before a major crash. Capital then rotates from Bitcoin into Ethereum and other large-cap assets, usually about 200 days after a Bitcoin halving.
In early May 2025, we saw initial signs of euphoria, but Ethereum's rally has not achieved the market-cap dominance of previous cycles. Despite a recent 60% price increase, ETH is still nearly 50% below its 2021 peak and comprises only 9% of the total crypto market.
The recent uptick in ETH dominance coincides with a slight decline in Bitcoin dominance. However, drops of 5-7.2 percentage points are insufficient to signal an altseason, as historical declines typically range from 30-50 points. Therefore, we are not yet in a full altseason.
Ethereum's recent rally has been largely attributed to the Pectra upgrade, launched on May 7, 2025. This upgrade enhances Ethereum’s transaction throughput and competitiveness against emerging Layer-1 blockchains. While initial analysis links ETH’s price surge to Pectra, historical patterns reveal that previous upgrades, like the Merge and Dencun, led to "sell-the-news" events rather than sustained rallies.
What sets Pectra apart is that ETH experienced a stronger rally post-upgrade, following a significant downturn in price. However, options market data complicates the narrative; the increase in implied volatility for ETH options indicates that traders were reacting to broader macroeconomic changes rather than just the upgrade itself. Notably, the volatility for short-term options surged after Pectra’s rollout, highlighting that market sentiment shifted in response to external factors.
Ethereum's rally beginning May 8, 2025, was not solely due to the Pectra upgrade; it coincided with President Trump's announcement of a trade deal with the UK, triggering risk-on sentiment in US equity and crypto markets. This led to a simultaneous rally in the S&P 500, Nasdaq-100, BTC, and ETH, with ETH surging over 23%—its largest single-day gain since May 2021.
Shortly after, the US and China announced reduced tariffs, enhancing market optimism. This shift was evident in ETH’s derivatives markets, where the 30-day futures implied yield surged above 15%, indicating strong demand for long positions. Notably, this bullishness stemmed from improving macro conditions rather than anticipation of Pectra.
Perpetual swap funding rates for ETH also stabilized above spot prices, reflecting robust demand for leveraged positions. Additionally, falling gold prices reinforced that the rally in risk assets, including Bitcoin and Ethereum, was driven by easing tariff uncertainties and shifting market sentiment.