Memecoin Mania Resurgence in Crypto Causing Ethereum to Rally

Memecoin mania is supposedly back in the crypto industry, causing Ethereum to rally. Increased meme coin activity on the Ethereum network caused ETH to move closer to $2,000, crossing briefly post Shapella Upgrade. Increased activity generates gas fees, which burns more coins, increasing the price.

The Meme Mania is Back, Benefiting Ethereum Network

On May 5, 2023, ETH closed at $1,900, hopping 5.61% higher, and at press time, it was trading at $1,965.61, jumping 3.66%. Its value against Bitcoin hiked by 3.02% to 0.06688BTC, market cap gained 3.70% to $236 Billion, and volume jumped by 50.48% to $10.17 Billion in the last 24 hours.

Bitcoin rallied to nearly cross the $31,000 mark for the first time in 11 months, following Ethereum Shapella Upgrade and probably due to the finding of Satoshi Nakamoto’s BTC white paper in macOS’ previous upgrades. At press time, it was trading at $29,405.49, hopping 0.63%, value against ETH dropped by 2.95% to 14.95 ETH, market cap gained 0.62% to $569 Billion, and volume was up by 3.49% to $17.37 to $17.37.

Since the start of 2023, cryptocurrencies have rallied noticeably without much volatility, and meme coins are slowly returning to the industry. Memecoins like Pepecoin (PEPE), SpongeBob token (SPONGE), Dogecoin (DOGE), and Shiba Inu (SHIB) are riding heavily on the hype created in the social media even though many investors suffered seriously after investing in them a while ago.

Michael Rinko, a research analyst at Delphi Digital, argued about the increased meme coin activity on-chain generating significant gas fees on the Ethereum network. These push ETH further into deflationary status as the supply decreases rather than increases. It is known that as the gas fee increases, more ETH is burned, further boosting the price.

The newly created SpongeBob token (SPONGE) was launched on May 4, 2023, and at press time, was trading at $0.0004858, gaining 342.95%; its volume increased by 1,356.13% to $31 Million, and its market cap was supposedly at $17.6 Million in the last 24 hours.

Pepe Coin (PEPE), based on the internet meme Pepe, the frog, was at press time, trading at $0.000003098, gaining 48.05%, trading volume hiked by 291.08% to $2.75 Billion, while market cap remained unchanged at $1.21 Billion in the last 24 hours.

Interestingly, in the last 24 hours, PEPE volume on Uniswap exceeded that of Tether (USDT) and wrapped Bitcoin (wBTC), two of the most significant trading tokens on the exchange.

For every transaction on the Ethereum network, a gas fee is charged, and it needs to be paid in ETH. The nodes in the network earn a fraction of this fee as a reward for spending computing power for validation and confirmation of transactions. The remaining fee is burned, meaning this increased activity is causing more burning and fueling the rally.

As ETH is already at its maximum supply, taking a considerable amount out of circulation through burning is supposed to increase the scarcity and rally.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing