Ethereum's price surge in 2025 is driven by a supply shock due to increased staking and reduced exchange inventories, coupled with rising institutional demand through spot ETFs and digital asset treasuries. The Pectra protocol upgrade and clearer U.S. regulatory guidance on staking have strengthened Ethereum's fundamentals. Nearly 30% of circulating ETH has been staked, creating a supply shortage that has pushed prices higher. Spot Ethereum ETFs, which began trading in July 2024, experienced accelerated inflows in May 2025 following regulatory clarifications. These ETFs and treasuries have accumulated significant holdings, further tightening the available supply. The Pectra upgrade has enhanced staking mechanics and scaling, boosting Ethereum's utility and yield potential. With stable regulations, institutional demand is expected to continue supporting the market.