Key takeaways:
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A longer-term ETH price rally is dependent on SEC approval of in-kind ETF creation and staking to attract more investors.
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AI adoption and Ethereum layer-2 growth must drive onchain activity to restore the network’s deflationary burn mechanism.
Ether (ETH) surged 43.6% between May 7 and May 14, but its current price of $2,600 still falls short of the 2021 peak of $4,868. Some analysts argue that the current bullish momentum is “just the beginning of a much larger and aggressive uptrend,” raising the likelihood of a near-term rally to $5,000.
However, the catalysts for a new ETH all-time high in 2025 remain uncertain, particularly in the face of intensifying competition.
According to X user AdrianoFeria, ETH is “the best candidate for institutional diversification” since professional fund managers appreciate “similar levels of regulatory clarity and accessibility” through multiple spot exchange-traded funds (ETFs), although recent data hasn’t been especially encouraging.
Ether remains the sole alternative to spot Bitcoin ETFs
Between May 12 and May 13, US-listed Ether ETFs saw net outflows of $4 million. The size of the Ether ETF market is 92% smaller than Bitcoin’s $121.5 billion, highlighting a clear lack of institutional appetite for ETH-based products. This has led some traders to question whether Ether can truly gain traction among professional investors.
While competing cryptocurrencies have outperformed ETH in 2025, their chances of being included in US state-level digital asset reserves have plummeted. This follows President Trump’s decision on March 2 to distance himself from lobbyists supporting XRP, SOL, and ADA. The “Digital Asset Stockpile” executive order issued on March 6 was notably more cautious, drawing a clear line between Bitcoin (BTC) and other altcoins.
Ether’s best-case scenario may involve a lack of direct ETF competition, which would depend on the US Securities and Exchange Commission rejecting several pending applications. Analysts also suggest that Ether ETFs could gain momentum from in-kind creation and staking approvals—developments considered highly likely before year-end, according to Bloomberg Intelligence analyst James Seyffart.
‘Pectra’ upgrade improved scalability, setting the stage for AI adoption
Previously hailed as the answer to Ether’s monetary policy, the built-in burn mechanism introduced in 2021 was designed to reduce supply growth based on network demand. However, the shift in focus toward scalability through rollups has largely offset its deflationary impact. As a result, a significant increase in onchain activity is now required for Ether to become deflationary once more.
The recent ‘Pectra’ upgrade has improved data transmission efficiency, setting the stage for enhanced scalability. Layer-2 network activity rose 23% compared to the previous month, with the Base network taking the lead at 244.2 million transactions in 30 days, according to L2beat. If this momentum holds, it could generate sustained demand for ETH and help further differentiate Ethereum from rival platforms.
Related: Ethereum retakes 10% market share, but ETH bulls shouldn’t celebrate yet
The path to a $5,000 ETH price remains uncertain, but artificial intelligence may serve as a powerful catalyst. Ethereum advocate Eric Conner observed that ChatGPT prefers Ethereum’s layer-2 infrastructure for managing funds via multisignature contracts, allowing autonomous agents to pay merchants, settle balances, and allocate surplus into decentralized finance applications.
Although it is difficult to predict whether the AI-driven trend will fully develop, the potential for smart contract activity to increase tenfold from current levels is within reach. This growth could make a new all-time high for ETH in 2025 achievable, especially if institutional interest accelerates following long-awaited regulatory changes.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
