Ethereum has successfully gone through its long awaited Pectra upgrade on the mainnet on May 7th, 2025. The upgrade is meant to increase scalability, make the user experience better and refine staking mechanics on the Ethereum network. Follow market reaction to their upgrade has been very positive, aided by a macro backdrop that’s been quite favorable.

Pectra is a combined name representing two simultaneous Ethereum upgrades: Prague, which targets the execution layer, and Electra, which targets the consensus layer. The upgrade is an enormous one, consisting of 11 Ethereum Improvement Proposals (EIPs). This represents the most EIPs included in a single upgrade, ever! Using sharding techniques and Layer 2 solutions to increase transaction throughput and reduce network fees are essential focuses for him.

Key Features and Improvements

Pectra introduces a number of exciting features and improvements to the Ethereum ecosystem. The most remarkable improvement happens to be the doubling of data capacity for L2 blobs. This change not only reduces congestion on mainnet, thus lowering gas fees, and creates a more efficient and user-friendly network overall.

The upgrade is made up of 11 EIPs, showing the complexity and completeness in improving all aspects of the Ethereum ecosystem. From easing the load on transaction processing to innovative staking mechanisms, these proposals lay groundwork for a more secure and flexible network.

The use of sharding techniques and Layer 2 solutions are at the heart of Pectra’s mission to become an advanced scalable ecosystem. Instead of one single chain, Ethereum distributes the computational load across multiple shards. By leveraging Layer 2 protocols, it hopes to be able to obtain greater transaction throughput and more affordable fees.

Historical Upgrade Performance

Ethereum’s experience with previous upgrades can help us understand how the market will react. The Merge on Ethereum in September 2022 was a historic milestone. Nary a day after its completion, the price of ETH fell ~15% in just a week’s time. Tweet from Coin Metrics London Hard Fork in August 2021 was the catalyst for ETH price run up. They soared from about $2,600 to over $2,780, an almost 7% gain on the day of the upgrade.

The Shanghai/Shapella upgrade in April 2023 triggered a rally in ETH prices. Just a week after this upgrade, ETH had jumped to $2,110 – an 11-month high. Lessons from history prove that underlying market conditions are a significant, if not the most important, driver of ETH prices. Another factor that has a huge effect on upgrade impacts is overall sentiment.

Market dynamics will inevitably play a huge role in dictating the response of Ethereum to upgrades. Usually, bull markets make the upgrades’ positive impacts seem even larger while in downtrends, news of significant improvements can be buried.

Market Reaction and Future Outlook

Our Pectra upgrade went live without a hitch on May 7, 2025. We couldn’t have imagined the market response, which has far exceeded our expectations. Ethereum has surged tremendously, fueled by the upgrade in question and underpinned by a more positive macroeconomic backdrop.

Pectra has the potential to power huge positive-ETH growth for Ethereum around 2025–2026. This is true especially if the broader macro landscape is favorable to the crypto market. A daily close above $2,100 would likely open the door for ETH to challenge $2,500.

With the successful deployment of Pectra, Ethereum has reached a very important milestone. It focuses on hitting the right notes on scalability, user experience and staking mechanics. How the upgrade will affect performance across the entire network and the market’s valuation of that performance will be watched closely over the next several months.