Ethereum successfully deployed its much-anticipated Pectra upgrade on May 7, aiming to enhance the network’s performance, usability, and fee efficiency. Yet, despite the technical milestone, the price of ETH has failed to rally in any significant way leaving investors questioning why.
Modest Price Movement Post-Pectra
On the day of the upgrade, Ethereum opened at $1,849 and closed at $1,811, a slight 2% intraday decline. As of now, ETH is trading at $1,936, representing only a 5% increase from its pre-upgrade level. Given the significance of the upgrade, many had expected a more bullish response.
So, what’s behind the muted price action?
Macro Headwinds Weighing on Sentiment
One factor is the broader macroeconomic landscape. Continued uncertainty in global trade, particularly driven by the ongoing tariff war, has impacted risk assets across the board, including cryptocurrencies. With investors treading cautiously, even significant technical advancements are struggling to break through the noise.
User Activity: Ethereum Is Losing Ground
More critically, Ethereum’s price underperformance appears to be structural rather than simply situational. Between July 2023 and April 2025, Ethereum’s daily active addresses have stagnated in the 400,000 to 600,000 range a modest figure compared to the explosive growth of its competitors.
- Tron (TRX) has surpassed 2.5 million daily active addresses
- Ton (TON) peaked at 3.6 million, showing massive traction in user adoption
This signals a decline in retail user growth for Ethereum, a crucial element typically responsible for fueling price rallies during bullish cycles.
Institutional Trust Remains Strong
On a more positive note, Ethereum still leads the DeFi ecosystem in terms of Total Value Locked (TVL). According to DeFiLlama, Ethereum currently holds $52.6 billion in TVL, far ahead of any other chain. This underscores the network’s security, reliability, and trust from institutional players.
However, institutional TVL alone does not drive day-to-day price momentum. Retail engagement and network activity metrics like daily active addresses and transactions remain essential indicators of adoption and value accrual.
Pectra’s Limitations: A Technical Win, But UX Friction Remains
While the Pectra upgrade introduced technical improvements such as:
- Lower blob fees for more cost-effective data storage
- Enhanced wallet usability and interface features
…it did not address one of Ethereum’s biggest pain points: the fragmented Layer 2 experience. The lack of seamless bridging between L2 networks continues to create friction for users and developers alike. Until Ethereum streamlines cross-chain interactions and makes onboarding smoother, broader adoption may remain limited.
What ETH Needs to Break Out
For ETH price to gain meaningful momentum, investors and traders will likely need to see:
- Increased daily active users and transaction volumes
- Streamlined L2 interoperability, improving user experience
- Improved retail engagement, not just institutional confidence
Until then, Ethereum may continue to underperform relative to faster-growing Layer 1 networks, despite its technical prowess and security dominance.
The Pectra upgrade is an important milestone for Ethereum’s long-term evolution, but it alone isn’t enough to spark a major price rally. Without tangible user growth and a better onboarding experience across its ecosystem, ETH may struggle to reclaim momentum no matter how strong the fundamentals appear on paper.
