Ethereum’s next major upgrade

After some setbacks, Ethereum’s “Pectra” upgrade is currently expected in April or May.

There’s never a dull moment on the blockchain. Here’s what you need to know this week:

Bitcoin held steady after a pivotal Fed meeting. Also, BTC ETFs saw inflows for the first time in five weeks, and institutions said they’re planning to expand crypto exposure.

What to expect from Ethereum’s “Pectra” upgrade. Will it help the second biggest blockchain reestablish momentum?

The tokenized treasury market just notched an all-time high. And more key stats from around the cryptoverse.

$85,304.46

$1,638.84

$1.00

$2.15

$130.39

$1.00

See the latest prices

MARKET BYTES

Volatility eases as Federal Reserve takes “wait and see” approach at latest meeting

Crypto markets, which have recently seen significant volatility, settled down this week, with BTC rising above $85,000 on Wednesday following the news that the Federal Reserve will continue to hold interest rates at current levels.

“While the regulatory headlines have been ostensibly supportive, many market players are concerned that the momentum for further crypto-specific catalysts has slowed considerably” noted a new report from Coinbase Institutional. “That’s left macro factors firmly in the driver’s seat.”

Here’s what you need to know…

Interest rates stay put as Fed cautions about economic “uncertainty”

A major trigger for recent market volatility has been uncertainty around the impacts of President Trump’s economic agenda. While the White House has signaled comfort with a “period of transition” as tariffs take effect — suggesting that a short-term “disturbance” could lead to a longer-term boom for the U.S. economy — stocks and crypto have generally seen declines in recent weeks.

At their Wednesday meeting, The Federal Reserve’s Open Markets Committee (FOMC) held rates at current levels (between 4.25% and 4.50%), an expected move after the latest inflation data came in above the Fed’s 2% target. The committee also continued to forecast that two cuts totalling half a percent are likely for later in the year.

As one Goldman Sachs executive put it to CNBC, “For the time being the Fed is in wait and see mode.”

Hold steady… Even though Fed Chair Jerome Powell described the U.S. economy as “strong overall,” the central bank signaled growing concerns about inflation and slowing economic growth. “Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and deregulation,” Powell said. “It is the net effect of these policies that will matter for the economy and for the path of monetary policy.”

After weeks of losses, BTC ETF inflows returned on Monday

Spot bitcoin exchange-traded funds (ETFs) have now seen five straight weeks of outflows totaling around $5.4 billion, according to SoSoValue data.

But on Monday there was finally some good news, as daily flows turned sharply positive to the tune of $274.6 million. Factors that triggered the shift include “bitcoin’s price stabilization and renewed institutional interest,” an analyst told The Block.

Sui generous… Meanwhile, new crypto ETF applications continue to emerge, with Canary Capital announcing this week that it is seeking SEC approval to launch a spot Sui ETF. “Given the speed and efficiency of the Sui chain, we believe it will be a destination for many future projects,” said Canary’s CEO.

83% of institutional investors plan to increase crypto exposure

It wasn’t that long ago that the prevailing attitude around crypto on Wall Street was skepticism. But a new survey of decision makers at 352 firms (conducted by Coinbase and EY-Parthenon) shows how far things have come.

An overwhelming majority (83%) of surveyed investors plan to increase their allocations to crypto in 2025, driven by their view that cryptocurrencies represent the best opportunity to generate attractive risk-adjusted returns over the next three years, according to the data.

And 59% of surveyed firms plan to allocate more than 5% of their assets under management to crypto in 2025.

The bottom line… “Increased investor interest is driven in part by the belief that greater regulatory clarity will be the catalyst that unlocks a new wave of opportunities in digital assets, particularly with regard to custody,” notes a report based on the survey.

ETHVOLUTION

What to expect from Ethereum's next major upgrade

This week, Ethereum network developers launched a new test network for a highly anticipated upgrade to Ethereum’s blockchain called “Pectra,” which is supposed to significantly improve Ethereum’s usability, speed, and efficiency when it goes live this spring.

But after some technical hiccups while testing the upgrade and several months of disappointing price action from ETH, could Pectra give the second biggest blockchain some much needed momentum?

Here’s what you need to know.

What is the Pectra upgrade?

Pectra is set to be Ethereum’s third major upgrade since the “Merge” in 2022, which officially transitioned Ethereum to a proof-of-stake network.

It’s expected to roll out across two stages starting in April or May, and is largely focused on fees, transaction processing, and data storage.

Why is it important?

According to a report from 21Shares, Ethereum has struggled to compete with faster and cheaper competitors like Sui and Solana, while also being challenged by Layer 2 (L2) blockchains — crucial parts of the Ethereum ecosystem that are built on top of the Ethereum network and designed to help ETH handle more traffic. (L2 networks include Base, Optimism, and Arbitrum.)

One of Pectra’s main goals is improving the integration of L2 blockchains to allow more transactions and help the main Ethereum network capture more revenue.

In a blog post this year that laid out some of the challenges facing ETH, cofounder Vitalik Buterin said he’s committed to improving the economics of its relationship with L2s.

“We need to make sure that ETH continues to accrue value even in an L2-heavy world,” Buterin said, “ideally solving for a variety of models of how value accrual happens.”

What else is planned?

One improvement that will impact users more directly is flexible fee payments. Currently, Ethereum users are required to pay transaction fees (also known as gas) in ETH. When Pectra is live, users will be able to pay fees with other Ethereum-compatible tokens, including stablecoins like USDC and even memecoins.

Third-party apps will also be able to “sponsor” gas fees for users, potentially making it cheaper (or even free) to use some onchain apps.

Ethereum-compatible wallets will also get new capabilities, including batched transactions (which can reduce fees and network congestion) and smart contract compatibility (which will allow for new kinds of automated transactions).

Developers will also be able to more easily build wallet recovery tools and enhance security via multi-signature wallets, which require multiple approvals before executing a transaction.

What might Pectra mean for ETH’s price?

Major network upgrades haven’t necessarily resulted in a near-term spike for ETH in the past. After the Merge upgrade in September 2022, for instance, ETH’s price fell by around 13% a month later.

Analysts currently have mixed views about how the Pectra upgrade might impact ETH prices.

K33 Research offered a downbeat outlook in a recent report, suggesting that “it will take more than Pectra to turn around ETH sentiment in an already depressed market.”

Meanwhile, Gabriel Halm from IntoTheBlock provided a more optimistic view about the upgrade, saying that while it “won’t necessarily trigger an instant price bump,” it will improve Ethereum’s ecosystem, “enhancing its competitive edge.”

Learn ETH basics

NUMBERS TO KNOW

$4.62 billion

New all-time high market cap of tokenized treasuries (U.S. government debt that is represented by digital tokens on a blockchain), according to data from rwa.xyz. The largest custodian of these digital “real world assets” is BlackRock’s BUIDL fund, with more than $1 billion in tokenized treasuries.

130 BTC

Amount of bitcoin (worth about $10.7 million) that Strategy purchased between March 10 and March 16 according to a new SEC filing. The BTC acquisition — relatively small compared to prior purchases — brings the largest corporate bitcoin holder’s total position to 499,226 BTC. The firm also announced plans to raise $500 million in part to acquire more BTC.

Age of the Solana network as of Monday, March 17. The blockchain was created in 2020 as a fast, cheap Layer 1 network, and it has grown to support a variety of projects including decentralized exchanges, lending protocols, games, and memecoins like BONK and WIF.