Traders are actively preparing for the upcoming Pectra upgrade on Ethereum, prompting speculation about whether the familiar market trend of “buying the rumor and selling the news” will emerge once again. The upgrade is currently set for early April, following a successful testnet between February 24 and March 5.
Recent reports from the crypto options trading desk, QCP Capital, indicate that traders are adopting a bullish stance in anticipation of this event. The firm suggests that volatility appears to be favoring call options post-March 28, setting the stage for potential market positioning strategies.
Impact of Pectra Upgrade on Ethereum’s Price
QCP Capital’s analysis reveals that earlier upgrades on the Ethereum network witnessed a surge in prices beforehand, leading to sell-offs after the actual implementation. However, in the case of the Shanghai upgrade in April 2024, the market scenario was different. QCP Capital highlights the historical patterns, stating that previous upgrades had varying impacts on Ethereum’s price movement.
The Pectra upgrade is designed to introduce eleven significant features, including blob expansion and enhanced smart wallet capabilities to the Ethereum network. These scalability improvements have already shown promising results, with gas charges dropping to levels comparable to Solana.
Despite these advancements, the demand for Layer 1 solutions on Ethereum has remained relatively stable. The real test lies in whether the Pectra upgrade can drive a substantial increase in demand for Layer 1 solutions in the future.
Will Ethereum Surpass $4,000 Again?
Recent trends in options trading signal a bullish sentiment, with a significant number of calls targeting price levels of $3,200 and $3,000. Conversely, puts aiming at $2,000 have been acquired for protection, indicating a cautious approach among short-term options traders expecting a surge towards $3,200 with $2,000 acting as a support level.
However, the Options market appears less optimistic about Ethereum reaching the $4,000 mark post the Pectra upgrade. Current market data suggests a modest 14% probability of Ethereum reclaiming $4,000 in the near term. The odds slightly improve to 25% by June, indicating a higher likelihood of Ethereum targeting the $4,000 level during the summer months.
Rise in Ethereum Accumulation
Despite Ethereum’s recent price stability, there has been a notable increase in accumulation as investors transfer ETH off exchanges. On February 5 alone, a significant amount of 367,000 ETH was moved off exchanges, signaling an ongoing accumulation trend, especially during price dips below the $3,000 mark.
The potential for Ethereum’s price surge driven by this accumulation trend largely depends on the overall improvement in market sentiment and investor confidence.