Ethereum (ETH) is leading the cryptocurrency market surge on 6 February, posting a 4% daily gain to trade above $2,800. While the overall crypto market capitalisation has risen by just 0.65% in the last 24 hours to reach $3.23 trillion, ETH’s outperformance is being driven by a combination of factors. These include increasing investor interest in the upcoming Pectra upgrade, rising inflows into Ethereum exchange-traded funds (ETFs), and bullish technical indicators suggesting a potential price breakout.

Pectra Upgrade Sparks Investor Optimism

One of the primary catalysts behind Ethereum’s price rally is the upcoming Pectra upgrade, which is set to be one of the most significant updates in the network’s history. The upgrade aims to enhance Ethereum’s scalability, increase transaction speeds, and reduce gas fees by doubling the blob space in Ethereum blocks, among other features.

Scheduled for March 2025, Pectra will undergo test runs on Ethereum’s test networks, Sepolia and Holesky, throughout February. By improving network efficiency and reducing costs, the upgrade is expected to attract more developers, increasing demand for ETH and strengthening the ecosystem.

Ethereum researcher Justin Drake has expressed optimism about the impact of Pectra on ETH supply, stating on 5 February: “To become ultrasound again, either issuance has to decrease, or the burn has to increase. I believe both will happen.”

Crypto investor Ted Pillows also weighed in on the bullish sentiment, remarking: “A lot of bullish things are happening now with Ethereum, including the Pectra upgrade, and none of them have been priced in. Sentiment is at an all-time low, which is the best signal for reversal. $5,000 ETH is coming before April 2025.”

ETF Inflows Boost Market Confidence

Adding to Ethereum’s positive momentum is the continued influx of capital into US-based spot Ethereum ETFs. Over the past five days, spot ETH ETFs have recorded positive inflows totalling $421.5 million, bringing the year-to-date inflows to $1.1 billion. The cumulative total net inflow now stands at $3.17 billion.

BlackRock’s ETHA fund has emerged as the primary buyer, accounting for $579 million in inflows between 21 January and 5 February. Market analysts expect ETFs to attract substantial investments in 2025, particularly if regulatory changes permit staking within these funds.

Key Technical Levels to Watch

From a technical perspective, Ethereum’s market bias remains slightly tilted to the downside, suggesting the possibility of another correction if selling pressure increases. The relative strength index (RSI) is currently below its neutral level, indicating that bears still hold an advantage. Additionally, moving averages have formed a bearish crossover, which could position ETH for further downside movements.

However, should Ethereum manage to reclaim the $3,000 mark as a support level, analysts predict the uptrend will resume. Historically, ETH has surged between 20% and 35% after breaking past and holding above this level. The key support zone to monitor is just above $2,700, according to the liquidation heatmap from CoinGlass.

If Ethereum successfully turns $3,000 into a support level, it could rally towards the 16 December range high of $4,100, representing a potential 44% gain from current levels.

Conclusion

Ethereum’s recent price surge can be attributed to growing enthusiasm surrounding the Pectra upgrade, strong inflows into spot Ethereum ETFs, and the possibility of a bullish technical breakout. While short-term volatility remains, the overall sentiment suggests that ETH could continue its upward momentum, with analysts eyeing a potential climb to $5,000 before April 2025. Investors will be closely watching whether Ethereum can establish $3,000 as a strong support level in the coming days.