Ethereum is experiencing a surge in network activity following the recent rollout of the Pectra Upgrade yesterday. The upgrade has contributed to a significant drop in the circulating supply of Ethereum. On-chain data shows that the circulating supply has dropped to mid-April lows.

Additionally, the shift in Ethereum’s network behavior comes as the broader crypto market experiences a boost from the latest U.S Fed decision and UK-US trade deal. These developments together with the reduction in circulating supply have pushed the price of Ethereum over the last 24 hours. ETH is currently knocking the door on $2,000. 

Pectra Upgrade Triggers ETH Supply Reduction

Since the Pectra Upgrade went live yesterday, the circulating supply of Ethereum has dropped significantly. This is as a result of more ETH burned than issued over the last 24 hours which boosted scarcity. On-chain data by Ultrasound Money shows that ETH’s circulating supply currently sits at 120.70 Ethereum. This level was recorded around April 15 – 18. 

With the Pectra upgrade now live, the validator limit has increased. Additionally, the upgrade has improved smart wallet functionalities. This has in turn improved Ethereum network’s efficiency and scalability. 

Furthermore, validators can now stake up to 2,048 Ethereum hence encouraging staking as well as reducing liquid Ethereum. The tightened supply is thus a result of both the technical upgrade to Pectra combined with increased user engagement.  

ETH Burn Rate Rises as Active Addresses Hit Monthly High

The Ethereum network is also experiencing a surge in burn which has further removed ETH from circulation. According to data on TradingView, the number of Ethereum burnt on My 7 was 197.36. This is the highest level recorded since we entered the month of May. 

The recent surge in ETH burn rate can be attributed to a surge in network activity on Ethereum. Notably, the number of the active addresses on Ethereum has increased in recent times. 

A surge in the number of active addresses usually increases demand in the network. This further leads to increased gas fees as users interact with decentralized applications (dApps). In turn, the burn rate of ETH pumps, through the EIP-1559 mechanism.

As per Glassnode analytics, the number of active addresses stood at 474,044 on May 7. This is the highest number of active addresses recorded since April 27 — a 10-day high.  

As more ETH gets burned, the lower the supply available for trading. This supply crunch is a key factor in the recent ETH price increase. If the uptick in ETH burn rate continues, pressure will mount on the price of ETH potentially pushing it higher. 

ETH Breaks Out Above Key Resistance; Headed To $2,000?

Ethereum has broken out of a horizontal range that it has been trading in since April 23, 2025. As per the daily ETH chart on TradingView, ETH is currently trading at $1,960 above the $1,756 – 1,863 horizontal zone. 

If Ethereum’s current momentum holds, the coin could retest the $2,000 level. This level serves as a key psychological level which if attained could bring back confidence amongst investors. Further bullish momentum could push ETH towards the $2,240 level where the next resistance lies. 

Failure to hold current momentum will lead to a retrace in the price of ETH. A slide back to the $1,756 – 1,863 horizontal is more likely in such a scenario. The $1,756 level floor will act as support. But failure to stay above this level could trigger deeper decline to the next support around $1,613. 

Macroeconomic Factors and Political News Add Momentum

Besides the Pectra upgrade and its positive impacts, Ethereum is also riding on the wave brought about by the recent FOMC meeting. Notably, the Federal Reserve decided to keep the interest rates steady. However, the crypto market is already pricing in three rate cuts starting in July.

With the monetary policy favorable for risk assets like cryptocurrencies, Ethereum is enjoying the clear waters. However, market participants will continue to monitor the price of ETH to determine whether the coin will hit $2,000 or retrace to the horizontal $1,756 – 1,863 zone.