Top 5 reasons why Ethereum could rally in 2025

Ethereum (ETH) consolidated around $3,400 on Tuesday and is poised to close the year with a nearly 50% return. Ethereum has made huge gains compared to Bitcoin and most of the altcoins are among the top 20 tokens by market cap

The narrative may change in 2025 with catalysts such as the upcoming Ethereum upgrade, accumulation from institutional investors, and other market movers.

Ethereum gears for Pectra upgrade in 2025

Ethereum may see an increase in scalability, security, and user experience with the upcoming Pectra upgrade, which is expected to go live in 2025. The upgrade will bring improvements to account abstraction, authentication processes, and network performance.

The goal is to improve both the user and developer experience on Ethereum and make it easier to implement future scalability upgrades.

Validator stake limits, stake withdrawals, and streamlined smart contract development can improve Ethereum’s network security and efficiency. This could have a domino effect on Layer 2 chains that rely on Ethereum for their security infrastructure.

Pectra will be the third most significant upgrade to the Ethereum ecosystem after the Merger, and its successful implementation could serve as a catalyst for Ether’s recovery in 2025.

Ethereum analyst Anthony Sassano predicts that the Pectra upgrade will go live next March or April. In particular, Unichain, an Ethereum-based protocol that will launch its mainnet in early 2025, aims to use blobs, and Pectra’s improvements could help Ethereum meet Unichain’s scalability requirements.

We get a 3/6 to 6/9 blob increase with Pectra in March/April (my guess).

Unichain is scheduled to launch its mainnet in early 2025 and they will use blobs.

The demand for blobs has only increased and Ethereum will scale to meet this demand!

— sassal.eth/acc 🦇🔊 (@sassal0x) December 31, 2024

Institutional investors accumulate Ether during declines

On-chain data intelligence platform Santiment shows consistent growth in two key metrics: the supply held by off-exchange top wallet addresses and the token’s top addresses as a percentage of total supply.

The increase in these metrics in November and December indicates that large wallet investors are accumulating Ether.

Ethereum supply is in the hands of non-exchange addresses and the supply is in the hands of the most important addresses | Source: Santiment

Data from Lookonchain shows that organizations such as World Liberty Financial, backed by Donald Trump, have been purchasing Ether tokens during declines in the price of ETH.

As the supply of Ether held by major entities outside exchange platforms increases, this indicates whale accumulation, a typically bullish indicator for ETH.

US-based Spot Ethereum ETFs can transfer staking yield

While many US-based spot Ethereum ETFs have been approved by the SEC, none currently include staking yield. The regulator withdrew all ETF proposals, including staking, unlike those in Switzerland and Canada.

Pro-crypto regulations under President-elect Donald Trump could pave the way for investors to increase their returns through ETH staking rewards. ETF issuers can benefit from staking rewards through increased NAV, reduced management fees, and dividends.

A report by Bernstein Research suggests that under the crypto-friendly Trump administration, the SEC will likely approve staking returns for Ethereum ETFs.

Bernstein Research comments on Ethereum ETF | Source: Bernsteinresearch Higher adoption among institutions outside of token usage

Brickken CTO Dario Lo Buglio told Crypto.news in an exclusive interview:

“One thing people need to remember about Ethereum; Ethereum not only has financial use cases like Bitcoin, but also smart contracts. It can be used to program applications and there must be a balance between the value of Ethereum and its utility as a form of payment and decentralized applications.

I cannot say that there is a delay in prices. What I think is a delay is active development. And this is because it is the largest decentralized blockchain and it takes time to make changes, unlike Solana and other protocols that can be upgraded without any problems.

Lo Buglio remains optimistic about Ethereum’s adoption among institutions due to its smart contract functionality and underlying technology.

Technical analysis and targets

Ethereum was hovering around $3,400 on December 31. The cryptocurrency is facing resistance at $3,497 and finding support in the fair value range between $3,159 and $3,257. On the ETH/USDT daily price chart, technical indicators support a bullish outlook for Ether.

The relative strength index is reading 46 and sloping upwards, indicating positive fundamental momentum. The moving average convergence divergence repeatedly shows shorter histogram bars, indicating that the negative momentum is likely decreasing.

Investors should closely monitor a possible reversal in Ethereum’s price trend.

ETH/USDT daily price chart | Source: Crypto.news

As shown on the ETH/USDT daily price chart, the target for Ether is $4,500, with psychologically important support at $3,000.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.