Ethereum (ETH) Price Jumps 8%: What’s Driving the Surge?

The cryptocurrency market as a whole was in the process of recovering, with Ethereum (ETH) standing out among its peers. Earlier today, ETH was trading at $2,426 before surging to a peak of $2,711, marking a 10% increase in gains over the past 24 hours. Currently, the altcoin is being traded at $2,630, showing a 6% surge in just the last few hours.

Data from Coinglass indicates that open interest has risen by 15%, accompanied by a 5% increase in volume within the last 24 hours. This uptrend reflects a growing optimism among investors regarding Ethereum’s future. The recent upswing in price and investor sentiment follows observations by analysts that ETH was not meeting expectations in the current market environment.

In a surprising turn of events, the Ethereum network encountered inflation in 2024 for the first time since 2022. Despite burning 465,657 ETH since the beginning of the year, the network has seen a net increase in its supply by 75,301 ETH. The transition from a deflationary to an inflationary setting in Q2 2024 was driven by reduced network activity. During this quarter, 120,818 ETH were added to the blockchain due to the emission of 228,543 ETH, surpassing the 107,725 ETH that were burned.

The inflationary shift has caught many off guard, especially given the excitement surrounding Ethereum exchange-traded funds (ETFs). Data from Farside Investors revealed that on August 8, net outflows from Ethereum ETFs amounted to just $2.9 million. While Fidelity’s FETH experienced its first outflows since its launch, Grayscale’s Ethereum Trust (ETHE) witnessed a slowdown in outflows to $19.8 million. Commenting on this development, Crypto Kaleo, an analyst, remarked, “There was excessive hype about the potential impact of this ETF on prices initially—now, there is an abundance of fear, uncertainty, and doubt (FUD).”

In summary, Ethereum’s recent performance, transitioning into an inflationary phase and the market dynamics surrounding its ETFs, have been the focal points of attention within the cryptocurrency space. These developments underscore the evolving landscape and investor sentiment towards Ethereum as it continues to navigate through market fluctuations.