Ethereum's on the Move Again -- Here's What's Driving Today's Downward Move

Of all the top cryptocurrencies investors pay close attention to, Ethereum (CRYPTO: ETH) has become one of the best-performing tokens in the market over the course of the past two weeks.

Indeed, since Ethereum's Pectra upgrade was announced, this token has absolutely taken off. Over the course of the past week alone, Ethereum's price has surged 45% at the time of writing. Most of this move has to do with the expected improvements to Ethereum's infrastructure, as well as some rather significant withdrawal data from centralized exchanges (with $1.2 billion being taken off exchange over the past week).

Image source: Getty Images.

In this context, Ethereum's 24-hour decline of 2.2% at 3 p.m. ET doesn't look that significant at first glance. But certainly, any sort of meaningful intraday move will invite questions around how broad and sustained this decline could be moving forward.

Let's dive into the project's headwinds and tailwinds to see if we can come to a determination around where this token could be headed from here.

Momentum appears to remain tilted to the upside

Ethereum has underperformed other major rivals in the crypto sector such as Bitcoin for quite some time, and there are a myriad of investors who will point to this underperformance as reason to avoid holding this token that represents the world's largest DeFi ecosystem.

However, it's also true that over certain periods of time, Ethereum has vastly outperformed its larger counterpart. When investors become intrigued by the growth potential of utility-generating crypto projects (most of which continue to be built on top of Ethereum's infrastructure), this project can skyrocket much higher and faster than Bitcoin.

The project's recent Pectra upgrade does appear to pave the way for some very compelling advancements in terms of Ethereum's network growth potential. This upgrade is set to allow for systematic and programmable staking, promoting a more user-friendly experience for those on its network, and (hopefully) driving significantly more activity across its various DeFi applications.

The ability for users to take advantage of smart wallet functionality and staking flexibility is a bigger move than many may think. From my perspective, Ethereum's recent rally is more than warranted, with today's move being somewhat of a head-scratcher, given this project's recent momentum.

Ethereum's long-term catalysts matter more than short-term moves

When investing in any asset class, investors always have a difficult task in discerning just how much of a given move is signal or noise.

In this case, Ethereum's daily move lower doesn't appear to be concerning. If anything, some profit-taking does appear to be warranted after this recent surge.

But over the long term, it's clear that Ethereum's status as the go-to ecosystem for developers to build the biggest and best decentralized applications positions this token well for price appreciation. The network's Pectra upgrade is just the latest catalyst to add fuel to the fire.

Should you invest $1,000 in Ethereum right now?

Before you buy stock in Ethereum, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ethereum wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $796,353!*

Now, it’s worth noting Stock Advisor’s total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

Chris MacDonald has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.