Compass Investments

– After five months of sluggish momentum, Ethereum may finally be showing signs of life. Several analysts and market watchers are pointing to a confluence of technical signals, network activity, and upcoming improvements that hint that ETH may be on the verge of a massive surge.

One of the most compelling reasons for optimism is seasonality. Historically, May has been favorable to Ethereum. Coinglass data shows that this month has brought some of the highest gains for ETH, averaging over 27% . Although history does not guarantee future results, this factor makes traders pay close attention to it.

Cyclop’s analyst believes this pattern will repeat itself, predicting that Ethereum could reach $2,500 by the end of the month if the momentum continues.

In addition to price trends, onchain indicators are also turning green. The MVRV ratio, which compares the current market price of ETH to the average price of the last coin movement, has fallen to levels not seen since the COVID crash in 2020. Historically, such deep drops have preceded major rallies. Michael van de Poppe, who monitors this metric, believes this is a strong signal that ETH is undervalued.

Meanwhile, whale wallets are getting bigger. According to the latest data, addresses categorized as long-term holders increased their holdings by more than 22% from March to early May. Despite the recent price drop, these large holders have not wavered, and their confidence could be a decisive vote of confidence in Ethereum’s future.

The bullish mood is reinforced by Ethereum’s upcoming Pectra update, scheduled for May 7. The update aims to improve the user experience and functionality of the wallet, which could enhance the usability of the dApp and attract new users to the ecosystem.

The same day, the US Federal Reserve will announce its interest rate decision. If the decision is favorable to the market, it could serve as a catalyst, adding fuel to a potential Ethereum breakout.

Given historical trends, undervaluation signals, smart money activity and major network upgrades, ETH could be entering one of the most promising periods in recent months. However, macroeconomic factors remain relevant, and investors betting on the second largest cryptocurrency asset are keeping their eyes on Washington.