Ether’s Upgrade Cycle Meets a New Leveraged Tool.

August 25, 2026

Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.

Ether (ETH) is a cryptocurrency* like Bitcoin*, but that’s where many of the similarities end because they’re built on different ideas. Think of Bitcoin as closer to digital gold, while ETH is closer to the fuel or native asset of a decentralized software network. ETH is sensitive to unique catalysts like network upgrades, protocol economics, Layer 2 adoption, staking yields, regulatory milestones, and a developer ecosystem that ships code on a public schedule. The volatile digital asset* also trades on flows, the macro picture, and risk appetite.

Amid these crosscurrents, ETH is trading around $1,888 down roughly -61.9% from its August 2025 all-time high near $4,955.¹ The 52-week range spans $1,505.43 to $4,955.56 which tells you how wide the swings can get.¹

What Makes Ether Different

Ethereum is a blockchain* platform designed to be programmable, meaning developers can build things on top of it: smart contracts*, decentralized applications, tokens, non-fungible tokens* (NFTs), DeFi protocols*, and other blockchain-based services. Ether is the cryptocurrency that powers this network. It's used to pay the transaction fees that anyone interacting with Ethereum has to cover. The network is secured through proof-of-stake*, a system in which validators lock up ETH as collateral in exchange for the right to verify transactions and earn rewards.

Ether's catalyst set overlaps with Bitcoin on macro and flows, but it diverges on almost everything else. The Ethereum network is in its most active upgrade cycle since "The Merge" in 2022. Pectra went live in May 2025. Fusaka shipped in December 2025. Glamsterdam is targeting the first half of 2026 with parallel transaction execution and enshrined proposer-builder separation. Hegotá follows in the second half with Verkle trees and full stateless client support.² Each of those upgrades is a known event that can move sentiment around the network's competitive position.

The regulatory picture also shifted. On March 17, 2026, the SEC and CFTC jointly classified Ether as a digital commodity, removing one of the longest-standing overhangs on the asset.³ Five days earlier, BlackRock had launched an Ethereum ETF, and the ruling confirmed that staking is not a securities offering under the new framework.⁴ For traders, that classification matters because it opens institutional doors that were previously closed.

Ethereum also runs a Layer 2* ecosystem that now holds more than $40 billion in total value locked across 73 active rollups, led by Arbitrum ($15.9 billion) and Base ($12.1 billion).⁵ That activity is relevant to the trading setup because L2 growth can have bullish or bearish implications.

Why the Bulls Are Hopeful on ETH Now

The regulatory clarity is an important tailwind. Before March 17, every institutional conversation about ETH started with whether it was a security. That question is now answered at the federal level. The classification also unlocked staking-enabled ETF products, which could eventually attract capital that sat on the sidelines while the legal framework was unclear.

ETF flows showed demand can return quickly when conditions improve. April's $356 million in net inflows followed five consecutive months of outflows² as Ether prices stabilized after a sell-off.

The upgrade calendar adds another layer. Glamsterdam's parallel execution could triple Ethereum's Layer 1 throughput, and the shift to a biannual upgrade cadence signals the protocol is shipping faster than at any point since 2022.³ Traders bullish on ETH are watching whether the market starts pricing network improvements as competitive advantages.

Charles Schwab began rolling out spot Ether trading to its 39 million retail clients on May 13.⁶ Morgan Stanley confirmed plans for its own Ethereum ETF filing in January with an S-1 likely to launch before the end of 2026.⁷Access is expanding at the fastest pace in Ether's history, even if the price has not kept up.

Reasons to Be Bearish

The drawdown* is the first thing any trader sees when looking at the chart, including the sharp drop in early 2026. ETH is down 61% from its August 2025 high and has underperformed Bitcoin for most of the past year.² Market dominance has slipped below 10%.² Capital has rotated toward Bitcoin, and the institutional flow data reinforces that. Goldman Sachs cut its iShares Ethereum Trust ETF (ETHA) position by approximately 70% in Q1 2026, dropping from roughly $1 billion to $114 million. Harvard's endowment fully exited its ETHA stake.¹⁰

ETF flows can also be volatile. April's recovery looked constructive, but YTD cumulative flows for spot Ether ETFs remain negative.²

The supply narrative is also more complicated than it used to be. EIP-1559, a major Ethereum network upgrade launched in August 2021, has burned more than 5.3 million ETH since introduction, but the current burn rate has dropped because Layer 2 migration has reduced mainnet fee pressure. Ethereum's total supply has actually grown by roughly 950,000 ETH since The Merge.⁸ The same L2 scaling that bulls point to as ecosystem growth is the mechanism that weakens the "ultrasound money" thesis. That tension is real and unresolved.

Staking yields have compressed to a multi-year low around 3.0% to 3.2% as total staked ETH has crossed 34 million, roughly 29% of circulating supply.⁹ For traders watching the yield as a demand signal, the direction has been down, not up.

Where EVMU Fits

For traders with bullish conviction on ETH, the recently launched Direxion Daily Ether Bull 2X ETF (Ticker: EVMU) seeks 200% of the daily performance of Ether, before fees and expenses, sought through swap exposure to a reference spot Ether exchange-traded product (ETP). EVMU does not use futures-based structures, which means it does not have to roll futures contracts, a process that can impact performance in other leveraged products on ETH. The fund is designed for active traders who want defined daily leveraged exposure to Ether from the same brokerage screen they use for everything else. It is built for short tactical timeframes, not as a long-term strategic allocation. Because EVMU seeks daily results, holding it longer than one day can produce returns that differ materially from 2X the performance of Ether over that period, particularly in volatile markets.

What Comes Next for Ether?

Ether's catalyst set is broader than it has ever been. Network upgrades are shipping on a public schedule. Regulatory clarity arrived for the first time at the federal level. ETF flows can swing hard in either direction. Institutional access is expanding through new brokerage channels. The question for tra

* Definitions & Index Descriptions

Investing in the fund involves a high degree of risk. Investing in the Fund is not equivalent to investing directly in ether.

Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. The Fund's investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund's other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in the Fund may change quickly and without warning.

Leverage Risk – The Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with the reference ETPand may increase the volatility of the Fund.

Daily Correlation Risk - A number of factors may affect the Fund’s ability to achieve a high degree of correlation with the reference ETPand therefore achieve its daily leveraged investment objective. The Fund’s exposure to the reference ETP is impacted by the reference ETP’s movement. Because of this, it is unlikely that the Fund will be perfectly exposed to the reference ETP at the end of each day. The possibility of the Fund being materially over- or under-exposed to the reference ETP increases on days when the reference ETP is volatile near the close of the trading day.

Ether Risk — Ether is a relatively new innovation with limited history. The Fund does not invest in the current cash or spot price of ether. The market for ether is subject to rapid price swings, changes and uncertainty and is a largely unregulated marketplace. Ether Volatility Risk — The price of ether is highly volatile. If you are not prepared to accept significant and unexpected changes in the value of the Fund. Ether Futures Risk — The market for ether futures is less developed, and potentially less liquid and more volatile, than more established futures markets. While the ether futures market has grown substantially since ether futures commenced trading, there can be no assurance that this growth will continue.

Futures Contracts Risk - Risks associated with the use of futures contracts are (a) the imperfect correlation between the change in market value of the instruments held by the Fund and the price of the futures contract; (b) possible lack of a liquid secondary market for a futures contract and the resulting inability to close a futures contract when desired; (c) losses caused by unanticipated market movements, which are potentially unlimited; (d) inability to predict correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors; (e) the possibility that the counterparty will default in the performance of its obligations; and (f) if the Fund has insufficient cash, it may have to sell securities or financial instruments from its portfolio to meet daily variation margin requirements, which may lead to the Fund selling securities or financial instruments at a time when it may be disadvantageous to do so.

Additional risks of the Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Concentration Risk, Market Risk, Non-Affiliation Risk, Reference ETP Investment Risk and Cash Transaction Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.