Ethereum rises over 6% after decision to split Pectra upgrade into two phases

• Ethereum developers have agreed to split the Pectra upgrade into two phases.
• The first stage of the Pectra upgrade will go into effect in early 2025 and will present a proposal to improve the wallet experience.
• Ethereum could continue to rise if open interest remains on an uptrend and ETH breaks the $2,595 resistance.

Ethereum rose 6% on Thursday following the recent decision by the core developers of the main chain to split the upcoming Pectra update into two phases.

Ethereum core developers agree to split the Pectra upgrade into two phases

In Thursday’s Consensus Layer Call, Ethereum developers decided to split the upcoming Pectra update into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum Improvement Proposals (EIPs).

Pectra was supposed to be Ethereum’s biggest upgrade in recent times; however, the core developers have decided that it will now present a select number of proposals in two phases to make the upgrade less cumbersome.

The first stage will include eight EIPs, including Ethereum co-founder Vitalik Buterin’s EIP-7702, which introduces a new account abstraction method that will improve the user experience in the wallet.

The second phase will include an update to how bytecode is processed and executed by the Ethereum Virtual Machine, the decentralized virtual computing engine that executes smart contracts on the main chain. It will also include EIP-7594, which aims to implement a protocol to improve blob capability.

The first phase of the Pectra upgrade will go into effect as previously scheduled in early 2025, while the second phase will come much later.

According to the core developers, the decision to split the upgrade allows key features to be delivered in the first phase, leaving room for the proper implementation of the second.

Meanwhile, Ethereum ETFs posted a net outflow of $9.8 million on Wednesday, following a $14.7 million outflow from Grayscale’s ETHE and $4.9 million inflows into BlackRock’s ETHA.

Ethereum could continue its upward march if it breaks the $2,595 resistance

Ethereum is trading around $2,460 on Thursday, up more than 6% on the day. ETH saw over $31 million in liquidations in the last 24 hours, with long and short liquidations accounting for $5.68 million and $25.33 million, respectively.

Ethereum broke above $2,395 and downtrend line resistance as buyers intensified their momentum following the Federal Reserve’s (Fed) 50 basis point rate cut on Wednesday.

ETH/USDT 4 Hour Chart

The move could see ETH rally against the $2,595 rectangle resistance. If it does not see a correction around this level, then it could target the key price level of $2,817. After setting a yearly high in March, the $2,817 price level served as a major support level for over four months following ETH’s consolidation. A return to this level could fuel the bullish momentum.

ETH forward open interest (OI) also paints a bullish picture, rising more than 10% to surpass $10.7 billion in the past 24 hours – the highest level since the August 5 market crash.

Open interest is the total number of outstanding long and short positions in a derivatives market. Rising OI often indicates increased trader confidence, while the opposite is true for falling OI as traders are either closing positions or experiencing liquidations.

Open interest of ETH

The increase in ETH OI indicates that traders are becoming more confident in more potential upsides for ETH. A steady increase in this value could cause ETH to support the uptrend.

The 4-hour Relative Strength Index (RSI) and Stochastic have entered their oversold region above 70 and 80 respectively, indicating a potential correction is looming.

A daily candlestick below $2,395 will invalidate the thesis and see ETH consolidating again.

In the short term, $56.57M worth of positions are at risk of liquidation if ETH falls to $2,412.