Ether rallies 5% as meme mania re-enters the crypto market

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

Ether closed up 5.61% at around $1,990, according to Coin Metrics. It is still below the key $2,000 level it briefly broke in April after the Shapella upgrade. Earlier in the day, it rose more than 6% to hit a high of $1,999.59.

Bitcoin ended the day higher at $29,501.16. It is slowly returning towards the $30,000 level which it has struggled to recover since mid-April.

Market participants have been emphasizing attempts to bring meme mania back to crypto. Cryptocurrencies rallied to start the year but largely saw low volatility. Many investors sat on the sidelines after the FTX collapse, waiting for the market to weed out bad actors and irresponsible or otherwise unserious companies that contributed to some of the catastrophic events of 2022.

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 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 even more deflationary,” meaning that its supply is shrinking rather than growing, said Michael Rinko, a research analyst at Delphi Digital.

The new token SpongeBob (SPONGE), based on SpongebobSquarepants and launched on Thursday, has jumped almost 600% since then and is trading at less than 1 cent per coin, according to CoinMarketCap.

Pepecoin (PEPE), based on the Internet meme PepetheFrog, is up more than 120% in the past 24 hours, CoinMarketCap said. PepetheFrog 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 put it on a list of hate symbols .

“One of the main reasons ETH is up…is due to a resurgence in memecoins,” said Conor Ryder, research analyst at crypto data provider Kaiko. “Whatever your views on memecoins, the facts are that they drive users to transact on Ethereum, which helps the network earn more fees. Ethereum gas fees have been boosted by the return of memecoins , hitting 1-year highs today.”

“As gas fees increase, more ETH is burned, and at current activity levels, ETH is a deflationary asset, which should help drive the price of ETH higher,” Ryder added. “Over the past 24 hours, trading volumes for PEPE on Uniswap have exceeded volumes for Tether and Wrapped Bitcoin, some of the largest tokens on the exchange.”

Ether ended the week up 4.53%, marking its second consecutive positive week and the seventh of the last eight. Bitcoin closed the week up just 0.35%. This is the second consecutive positive week for bitcoin and its third positive week in four.

Gina Francolla contributed reporting

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