Ether Rallies More Than 6% as Meme Mania Reenters the Crypto Market
Ether, the second-largest cryptocurrency by market cap, has rallied more than 6% over the past 24 hours as the recent resurgence of meme mania spills over into the crypto market.
Meme mania, which refers to the recent explosion of interest in meme stocks like GameStop and AMC, has also led to a renewed interest in cryptocurrencies. Several cryptocurrencies with animal motifs, including Dogecoin and Shiba Inu, have seen their prices surge in recent weeks, as investors flock to these tokens in search of quick profits.
Ether, however, is not a meme token, but rather a utility token that powers the Ethereum network. Despite this, it seems to have benefited from the hype surrounding meme tokens, as investors rush to get in on the action.
One possible explanation for this is that meme tokens have helped to raise the profile of cryptocurrencies in general. As more people become interested in crypto, they are likely to start exploring other tokens besides the meme varieties.
In addition, the recent surge in meme tokens has led to a flood of new investors entering the market. These investors are likely to be less discerning than more experienced crypto traders, and may be buying up a range of tokens without fully understanding their underlying technology or real-world applications.
This may be driving up the prices of tokens like Ether, which has a strong track record and a solid use case within the Ethereum ecosystem.
Another factor that may be driving the rally in Ether is the growing interest in decentralized finance (DeFi) applications. These applications, which are built on top of the Ethereum network, allow users to access financial services without the need for a centralized intermediary.
DeFi has been growing rapidly over the past year, as more and more users turn to these applications for their financial needs. This has driven up demand for Ether, which is used as the primary token within many DeFi protocols.
As DeFi continues to gain traction, it is likely that we will see further growth in demand for Ether and other utility tokens.
Of course, there are some risks associated with the current crypto market rally. The recent surge in meme tokens, for example, has led some analysts to warn of a potential bubble in the market. If these tokens experience a sharp correction or lose their popularity, it could lead to a wider sell-off in the crypto market.
In addition, there are ongoing concerns about the energy usage of cryptocurrencies, particularly Bitcoin. While Ethereum is more energy-efficient than Bitcoin, it still requires significant amounts of electricity to maintain its blockchain.
As concerns about climate change grow, it is possible that we could see more pressure on the crypto industry to transition to more sustainable energy sources.
Despite these risks, however, the rally in Ether and other cryptocurrencies shows no signs of abating. With interest in crypto continuing to grow, and with new use cases emerging all the time, it seems likely that the crypto market will remain buoyant for some time to come.
The price of ether, the second-largest cryptocurrency after bitcoin, jumped on Friday as investors flocked to crypto’s newest memecoins. Ether rose more than 6% to $1,991, according to Coin Metrics, still below the key $2,000 level it briefly broke through in April following the Shapella upgrade. Bitcoin was up more than 2% to $29,496, inching back towards the $30,000 level it has struggled to recover since mid-April.
Market participants put the move on attempts to bring meme mania back to crypto. Cryptocurrencies rallied to start the year but have largely seen low volatility. Many investors have kept on the sidelines following the collapse of FTX, waiting for the market to wash out bad actors and irresponsible or otherwise unserious ventures that contributed to some of the catastrophic events of 2022.
However, memecoins like PEPE and SPONGE as well as dogecoin or shiba inu are driven by hype and social media and many investors have suffered significant losses from investing in them. “There’s a ton of memecoin activity on chain right now that’s generating a lot of gas fees,” or transaction fees on the Ethereum network, and “pushing ETH further deflationary,” meaning its supply is decreasing rather than increasing, said Michael Rinko, a research analyst at Delphi Digital.
The newly created SpongeBob token (SPONGE), which is based on Spongebob Squarepants and launched on Thursday, has surged almost 600% since and is trading at less than 1 cent per coin, according to CoinMarketCap. Pepecoin (PEPE), based on the Pepe the Frog internet meme, is up more than 120% over the past 24 hours, CoinMarketCap said.
“One of the main reasons ETH is up … is down to a resurgence of memecoins,” said Conor Ryder, research analyst at crypto data provider Kaiko. “Whatever your thoughts on memecoins, the facts are they drive users to transact on Ethereum, which helps the network earn more fees. Ethereum gas fees have been revived by the return of memecoins, just today hitting 1-year highs.”
“As gas fees increase, more ETH is burned, and at current activity levels ETH is a deflationary asset, which should help boost ETH’s price,” Ryder added. “In the last 24 hours, trading volumes for PEPE on Uniswap have surpassed the volumes of Tether and Wrapped Bitcoin, some of the highest-volume tokens on the exchange.”
However, memecoins are highly speculative investments and not suitable for all investors. They can be very volatile and may not have any real use cases or underlying value. Investors should always do their research and not invest more than they can afford to lose.