Ether surges greater than 6% as meme mania returns to the crypto market

Ether price surged Friday as investors bet on crypto’s latest memecoins.

ether surged more than 6% to $1,991.05, according to Coin Metrics. It is still below the key $2,000 level that it briefly broke in April after the Shapella upgrade.

Bitcoin rose more than 2% to $29,496.34. It is slowly approaching the $30,000 level again, which it has been struggling to recover since mid-April.

Market participants have tried to bring the meme craze back into the crypto world. Cryptocurrencies rallied earlier in the year but largely saw low volatility. Many investors have stayed on the sidelines following the FTX collapse, waiting for the market to wipe out bad actors and irresponsible or otherwise untrustworthy ventures that contributed to some of the catastrophic events of 2022.

Memecoins like PEPE and SPONGE as well dogcoin or Shiba Inu are driven by hype and social media, and many investors have suffered significant losses investing in them.

“There’s a lot of on-chain memecoin activity 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), based on Spongebob Squarepants and launched Thursday, is up nearly 600% since then, trading at less than 1 cent per coin, according to CoinMarketCap.

Pepecoin (PEPE), based on internet meme Pepe the Frog, is up more than 120% in the past 24 hours, CoinMarketCap said. Pepe the Frog was created by cartoonist Matt Furie in the early 2000s. In 2016, it was appropriated by the alt-right to the point that the US-based Anti-Defamation League created a list of hate symbols.

“One of the main reasons ETH has surged…is due to a resurgence in memecoins,” said Conor Ryder, research analyst at crypto data provider Kaiko. “Whatever you think about memecoins, the fact is that they trick users into trading Ethereum, which helps the network earn more fees. Ethereum gas fees have been revived by memecoin redemption and are only hitting a yearly high today.”

“As gas fees rise, more ETH will be burned, and at current levels of activity, ETH is a deflationary asset that should help push ETH’s price higher,” Ryder added. “Over the past 24 hours, trading volumes for PEPE on Uniswap have surpassed volumes for Tether and Wrapped Bitcoin, some of the highest-volume tokens on the exchange.”

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