Bitcoin gains 3% after a positive CPI report, while Ethereum struggles to keep up, rising just 0.5%.
Ethereum’s Pectra upgrade could boost adoption, but potential delays and volatility may hold it back.
Institutional investors remain cautious, with Bitcoin ETFs seeing $371 million in outflows and Ethereum ETFs losing $22 million.
Bitcoin is showing signs of life after a better-than-expected U.S. inflation report, but Ethereum isn’t keeping pace. Since the new CPI data dropped on Wednesday, Bitcoin has gained 3%, holding key support levels, while Ethereum is barely up 0.5%, according to CoinGecko.
NEW: $ETH / $BTC ratio hits lowest price since 2020
Tracy Jin, VP at crypto exchange MEXC, believes Ethereum’s upcoming Pectra upgrade could be a game-changer—if it delivers. The upgrade aims to improve network throughput and reduce transaction costs, which could boost demand for ETH.
“Under favorable conditions, ETH may reach $6,000–$7,000 this year,” said Jin.
However, she warned that Ethereum upgrades are rarely smooth, often plagued by delays and technical hurdles. The uncertainty surrounding Pectra could make ETH volatile for the next 3–6 months.
“When uncertainty is high, investors move to safer assets like the U.S. dollar, which pulls liquidity away from riskier assets like crypto,” Jin added.
Despite Trump’s ongoing trade wars rattling markets, the latest CPI report has raised hopes for a Federal Reserve rate cut in the first half of 2025. Historically, lower interest rates create bullish conditions for crypto.
After the inflation print, markets are now pricing in a 55% chance of a rate cut in June, according to the CME FedWatch Tool.
Institutional Investors Still Pulling Back
Even with this recent rebound, institutional investors remain hesitant. Bitcoin ETFs have seen $371 million in outflows, while Ethereum ETFs have lost $22 million, per Farside Investors data.
“Risk assets are still struggling, and markets are searching for fresh liquidity,” said Valentin Fournier, analyst at BRN.
What’s Next for Bitcoin and Ethereum?
Despite the bearish sentiment, Bitcoin and Ethereum holding key support levels is encouraging.
“In the near term, decisive action from the U.S. government could be the key driver to push Bitcoin back toward its previous all-time high,” Fournier noted.
With macro conditions shifting, institutional interest fluctuating, and Ethereum’s Pectra upgrade on the horizon, crypto markets remain on edge—but full of potential.
