Ethereum is back in the spotlight.
While Bitcoin continues to ride the momentum of spot ETF approvals, Ethereum is making its own strong case for a breakout. With institutional interest surging and a major network upgrade on the horizon, the ecosystem is abuzz with anticipation. On February 20, Ethereum briefly surpassed $3,000—its highest price since April 2022—fueling speculation that the long-awaited rally may finally be underway.
This renewed momentum stems from two powerful catalysts: the growing push for Ethereum spot ETFs and the imminent Dencun (Cancun) upgrade. Together, they form a compelling narrative—one that could redefine Ethereum’s role in both the crypto and traditional financial landscapes.
👉 Discover how Ethereum’s next major upgrade could reshape the future of decentralized finance.
The ETF Race Comes to Ethereum
While Bitcoin recently broke above $53,000, Ethereum hasn’t been far behind. On February 20, ETH surged past $3,000 before settling around $2,958—a two-year high. More importantly, Ethereum has outperformed Bitcoin YTD: up 28% compared to Bitcoin’s 21% as of February 22. This shift signals a changing tide in market sentiment, with capital increasingly flowing toward Ethereum’s ecosystem.
Two primary drivers are behind this move: spot ETF applications and the Dencun upgrade. Of these, the ETF narrative holds immediate market-moving potential.
Following the approval of 11 Bitcoin spot ETFs in January 2024, over $5.2 billion in net inflows have entered the market despite initial profit-taking. That success has set a precedent—and now, institutions are turning their attention to Ethereum.
Currently, six major financial firms—BlackRock, Fidelity, VanEck, Invesco, Hashdex, and 21Shares—have filed applications for Ethereum spot ETFs. Grayscale is also seeking to convert its existing Ethereum Trust (ETHE) into a spot ETF. The U.S. Securities and Exchange Commission (SEC) has delayed initial decisions, but key deadlines loom: March 5 marks the first potential approval date, with the final decision expected by July 2025. March and May are seen as critical approval windows.
This timeline mirrors Bitcoin’s ETF journey, where price momentum built steadily in the months leading up to final rulings. Similarly, Ethereum’s recent rally reflects growing investor confidence ahead of these decisions.
Regulatory Uncertainty: Commodity or Security?
Despite the optimism, regulatory clarity remains murky. The core debate centers on whether Ethereum qualifies as a commodity or a security under U.S. law.
The SEC has previously stated that Bitcoin is a commodity, but has stopped short of making the same declaration for Ethereum. In March 2023, SEC Chair Gary Gensler suggested that tokens with staking mechanisms—like ETH—may fall under securities regulations due to their yield-generating features.
However, in a notable legal development, the SEC did not include Ethereum in its list of securities during its lawsuit against Binance, despite naming over a dozen other tokens such as Solana (SOL), Cardano (ADA), and Polygon (MATIC). This omission has led many analysts to believe that regulators may implicitly treat ETH as a commodity.
Still, skepticism remains. JPMorgan predicts that an Ethereum spot ETF is unlikely to be approved within the next three months, citing regulatory caution. Bloomberg analyst James Seyffart, known for his cautious stance, even tweeted: “I’ll bet 4 ETH it won’t happen by March 2024.”
On the other hand, bullish forecasts persist. Eric Balchunas of Bloomberg estimates a 70% chance of approval, arguing that rejecting spot ETFs after allowing futures contracts would invite legal challenges. Bernstein Research puts the odds at 50% by May, with near-certainty within 12 months. Even Standard Chartered predicts approval as early as May 23, 2025.
Coinbase has formally submitted a 27-page comment letter urging the SEC to approve Grayscale’s conversion request. The exchange argues that ETH functions as a decentralized commodity with robust governance, low concentration risk, and strong resistance to manipulation—paralleling Bitcoin in key structural aspects.
The final decision could hinge on this classification battle—but until then, speculation continues to drive price action.
Dencun Upgrade: A Clear Path to Scalability
While ETFs remain in regulatory limbo, Ethereum’s Dencun upgrade offers a near-term technical catalyst with broad consensus.
Scheduled for March 13, 2024, Dencun (a combination of Cancun and Deneb) marks a pivotal step in Ethereum’s scalability roadmap. The upgrade introduces EIP-4844, also known as proto-danksharding, which significantly reduces data storage costs for Layer 2 rollups like Arbitrum, Optimism, and zkSync.
Why This Matters
- Gas fees on L2s could drop by up to 90%, making microtransactions and DeFi interactions far more accessible.
- Estimated reduction: up to 14x cheaper than current rates.
- Increased throughput allows more users and applications to operate efficiently on Ethereum’s ecosystem.
- Geth v1.13.12 was released on February 9 to support the hard fork—confirming technical readiness.
Historically, Ethereum upgrades have preceded bullish price movements. Research from the University of Texas at Austin found that ETH prices rose 18% on average in the weeks leading up to major upgrade announcements. During the Shanghai upgrade in April 2023—despite fears of staking unlocks—the price climbed to $2,100.
Dencun is expected to have an even greater impact, as it directly addresses one of Ethereum’s longest-standing pain points: high transaction costs.
Restaking Fever Fuels Ecosystem Growth
Beyond ETFs and upgrades, another trend is amplifying Ethereum’s momentum: restaking protocols.
Led by projects like EigenLayer, restaking allows users to reuse their staked ETH (or liquid staking derivatives like stETH) across multiple protocols, earning additional yield while enhancing network security. After temporarily lifting staking caps, EigenLayer’s Total Value Locked (TVL) skyrocketed from $2.15 billion on February 5 to $6.05 billion by February 10.
As of now, restaking protocols collectively hold over $69.9 billion in TVL, ranking sixth among DeFi sectors according to DefiLlama. Lido remains dominant in traditional staking with over 31% of all staked ETH, but EigenLayer’s rapid growth shows increasing demand for modular blockchain infrastructure.
This innovation not only strengthens Ethereum’s security layer but also deepens capital efficiency—making ETH more than just a store of value or gas token.
👉 See how restaking is transforming Ethereum into a multi-layered security economy.
Market Signals: Is the Rally Already Underway?
The signs point to yes.
Since BlackRock first filed its Ethereum spot ETF application on November 9, 2023, ETH has gained 27.9%—mirroring the early stages of Bitcoin’s ETF-driven rally, which saw a 55% surge after similar filings.
On-chain data reinforces this trend:
- Over the past three days, unidentified wallets have accumulated approximately 65,000 ETH.
- Stablecoin supply on Ethereum has grown by 4.4% since January 1—from $68B to $71B—indicating rising liquidity and demand.
Yet caution persists. After Bitcoin’s ETF approval, BTC dropped nearly 15% before recovering weeks later—a reminder that “buy the rumor, sell the news” dynamics are real.
Moreover, Standard & Poor’s Global warns that Ethereum ETFs could introduce centralization risks, especially if large custodians control significant staked positions. While decentralization remains strong today, institutional dominance could shift power dynamics long-term.
Frequently Asked Questions (FAQ)
Q: What is an Ethereum spot ETF?
A: A spot Ethereum ETF tracks the real-time price of ETH by holding actual ether tokens, unlike futures-based ETFs that rely on derivatives contracts.
Q: When will the SEC decide on Ethereum ETFs?
A: Key decision dates range from March 5 to July 2025, with March and May being critical approval windows.
Q: How does the Dencun upgrade benefit regular users?
A: It drastically lowers transaction fees on Layer 2 networks, making DeFi, NFTs, and dApps more affordable and scalable.
Q: Is Ethereum considered a security by the SEC?
A: The SEC hasn’t officially classified ETH as a security. Its exclusion from the Binance lawsuit suggests it may be treated as a commodity.
Q: Can restaking increase my yield safely?
A: Restaking offers higher returns but comes with added protocol risk. Users should assess smart contract security before participating.
Q: Will Ethereum outperform Bitcoin in 2025?
A: Early indicators suggest strong momentum for ETH, especially with ETF approval odds rising and Dencun boosting utility.
The convergence of institutional interest and technological advancement positions Ethereum at a pivotal moment. Whether through regulatory breakthroughs or network upgrades, the ecosystem is evolving rapidly.
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