Ethereum Springs Back Above $2.4 K—Recovery Signal or Mirage?

The second-largest crypto-asset by market value is back above the psychologically important US $2,400 line after a bruising six-month slide. Ether rallied more than 11 percent from last Thursday’s trough, trading between US $2,343 and US $2,521 during Monday’s settling near US $2,400 in late afternoon dealing. That marks welcome relief for holders—but the token is still 36 percent below the cycle peak reached in early November 2024, and the BTC/ETH ratio hovers near two-year highs, underscoring how far the native asset of the world’s busiest smart-contract network has fallen behind its older sibling.

Price Whiplash Meets Fresh Capital

Last week saw the strongest influx of money into crypto investment products since January: US $785 million streamed into exchange-traded products globally. Crucially, Ether vehicles captured US $205 million—26 percent of the total—signalling the first leadership hand-off from Bitcoin inflows in three months. Analysts attribute the rotation to two factors: anticipation of the “Pectra” hard fork later this year, and profit-taking in meme-coin-heavy Solana funds after their outsized run-up.

Spot liquidity is also improving. Aggregate exchange volume for ETH averaged roughly US $12.6 billion per day over the past week, 47 percent above the April mean. By contrast, open interest in perpetual futures across Binance, OKX and CME rose just 4 percent in the same period. The rebound is therefore driven mainly by fresh cash rather than derivative leverage—constructive for stability, but also a reminder that speculators have not yet returned in force.

Spot-Led, Not Leverage-Fueled

Derivatives desks report that ETH funding rates remain muted and occasionally negative, indicating hedging flows rather than outright bullish positioning. Options markets paint a similar picture: thirty-day implied volatility has recovered to only 46 percent, far off the triple-digit spikes seen during last year’s ETF-approval euphoria. In short, the price pop lacks the speculative froth normally associated with a sustainable leg higher. Should macro conditions tighten—think another upside surprise in U.S. inflation or a hawkish shift at June’s FOMC meeting—thin positioning could quickly flip into renewed selling pressure.

At the same time, a subdued leverage complex means forced liquidations are less likely to trigger a cascade. That may buy the network time to convert the current interest into stickier, utility-driven demand—something Ethereum has struggled to achieve since Layer-2 (L2) scaling solutions began siphoning transactions off the base chain.

On-Chain Pulse Beats Faster—Quietly

Daily L1 transactions hit 1.239 million on 18 May, a three-month high and about 14 percent above the year-ago level. Active-address counts have likewise climbed back over the 500 thousand mark after languishing below 450 thousand in April.

Yet network fees remain astonishingly low: the average gas price sits near 2.16 gwei, down almost 60 percent year-on-year. Cheap blockspace is a double-edged sword. It encourages experimentation and DeFi re-engagement, but it also turns Ether’s post-Merge burn mechanism net-inflationary. Since March the circulating supply has been expanding at roughly 0.8 percent annually—a small but symbolic reversal of the “ultrasound money” narrative that once underpinned much of ETH’s store-of-value appeal.

Layer-2: Growth With a Catch

The modular vision does appear to be working. Data from L2Beat show that rollups now secure US $44.2 billion in assets—an all-time high—with Coinbase-affiliated Base (US $14.3 billion) and Arbitrum One (US $13.3 billion) commanding nearly three-quarters of that pie. Cheaper fees on these networks have rekindled activity in gaming, social and derivative protocols, but because most transactions settle in USDC rather than ETH, the relationship between usage and Ether demand has weakened. Until Ethereum can monetise data-availability more aggressively—something Pectra promises by expanding blob space—the chain’s economic engine will continue to run below potential.

Crowded Stage: Bitcoin and Solana Steal the Show

Ethereum’s difficulties are compounded by narrative competition on two fronts. Bitcoin enjoys institutional mind-share after corporate behemoth Strategy lifted its holdings above 575 thousand BTC and the U.S. spot-ETF complex swelled toward US $100 billion. Prices near US $103,000 keep BTC within striking distance of its December record and leave the ETH/BTC rate hovering near 0.23, levels last seen during the 2022 post-Merge malaise.

Further down the risk curve, the frenzy around meme tokens—many of which launch on Solana—continues to suck speculative capital away from Ethereum. Listings such as DOGE, TRUMP and BONK dominate exchange leaderboards, and social chatter has turned to Solana’s throughput advantages rather than Ethereum’s smart-contract pedigree. Unless Ethereum’s own consumer-facing apps regain cultural cachet, its near-term upside will rely disproportionately on macro tailwinds and policy catalysts.

Regulatory Winds Shift

One such catalyst could be regulatory clarity. In a speech on 12 May, newly appointed SEC Chair Paul Atkins said the agency is drafting rules that would allow Alternative Trading Systems to list non-securities “like Bitcoin and Ethereum.” The shift, part of a broader departure from enforcement-first policymaking, could unlock substantial U.S. liquidity by giving broker-dealers a formal pathway to trade spot ETH.

Meanwhile, the spot-Ether ETF cohort—launched last July—has amassed roughly US $23.6 billion in assets. Grayscale’s ETHE converted its longstanding discount to a 2 percent premium last week, hinting at growing demand from traditional allocators. Should the SEC’s rulebook open the door for wider distribution agreements, that pool of capital could multiply quickly.

Three Paths Forward

Re-Acceleration (35 % probability): Pectra lands on time, L2 data fees jump, gas returns to double digits and ETF assets triple. Ether re-tests the 2021 high near US $4,800 with the ETH/BTC ratio recovering to 0.35.

Range-Bound (45 %): Macro remains steady but uninspiring; gas stays cheap; ETF flows plateau. Ether trades between US $2,000 and US $3,200 while staking yields anchor the lower bound.

Capitulation (20 %): A “higher-for-longer” Fed and a successful Solana Firedancer launch drain liquidity and developer mind-share. Ether slides toward US $1,500 and the ETH/BTC ratio compresses below 0.18.

These scenarios highlight how finely balanced the current juncture is: endogenous improvements alone are unlikely to ignite a structural bull without at least neutral macro conditions and supportive regulation.

The Bottom Line

Ethereum’s May rebound is more than a reflex but less than a renaissance. Fresh inflows and improving on-chain activity show that capital will return when the narrative turns, yet the absence of meaningful fee pressure and the diversion of liquidity to rollups and rival chains underline how fragile this momentum remains. For now, Ether sits between promise and peril, awaiting clear evidence—be it from the Pectra hard fork, a decisive policy breakthrough, or a breakout consumer application—that its growth engine can outpace the gravitational pull of its own success.