- Ethereum (ETH) could rebound in May, supported by rising ETF inflows, DeFi dominance, and the Pectra upgrade on May 7.
- However, macroeconomic risks and market correlation may limit its upside potential.
After a sluggish April marked by dwindling user activity and stagnant price movement, Ethereum (ETH) could be on the verge of a turnaround in May. A combination of rising ETF inflows, dominance in decentralized finance (DeFi), and the upcoming Pectra upgrade are setting the stage for a potential rebound.
April Recap: A Quiet Month for Ethereum
Ethereum’s on-chain activity took a hit in April. According to Artemis, daily active addresses and transaction counts dropped significantly, dragging down network fees and revenues. As a result, ETH struggled to break past the $2,000 mark, mirroring the broader crypto market’s sideways trend.
However, signs of renewed optimism are emerging. Inflows into spot ETH exchange-traded funds (ETFs) totaled $66.25 million in April, reversing March’s outflows of over $400 million. This shift suggests that institutional investors are regaining confidence in Ethereum’s long-term prospects.
May’s Catalysts: ETFs, DeFi Strength, and the Pectra Upgrade
Ethereum continues to dominate the DeFi sector, with more than 50% of total value locked (TVL) still hosted on its blockchain, according to DefiLlama. This entrenched position supports ETH’s utility and demand, particularly if broader market conditions stabilize.
Adding to the momentum is the much-anticipated Pectra upgrade, scheduled for May 7. This network upgrade promises enhanced scalability, lower gas fees, better security, and smart account functionality—improvements that could attract new users and developers to the ecosystem.
Also read: XRP Faces Volatility: Ripple Price Target Set at $2.12 Amid 1000% Liquidation Wave
Macroeconomic Headwinds Remain
Despite these bullish indicators, Ethereum faces external risks. Gabriel Halm, a research analyst at IntoTheBlock, warns that macroeconomic events—particularly the U.S. Consumer Price Index (CPI) release on May 13—could introduce volatility. A spike in inflation or hawkish signals from the Federal Reserve might dampen investor sentiment across risk assets, including ETH.
Moreover, Ethereum remains tightly correlated with the U.S. equities market. Any downturn in the S&P 500 could translate into downside pressure for ETH.
While Ethereum appears better positioned in May than it was in April, its growth potential hinges on both internal catalysts and external market conditions. If ETF interest sustains, DeFi activity rebounds, and Pectra delivers as expected, ETH may finally break through resistance—unless macro headwinds stall its momentum again.
