Ethereum (CCC:ETH-USD) is back on top. The network is ushering in a new era of bullishness as Ethereum prices surpass all-time highs. ETH fans are over the moon. But what do these bulls have to thank for ETH prices reaching this new level above $4,400? Some might say it’s the general market sentiment. Even still, some credit two different events for helping to push up Ethereum prices, including a little token called Shiba Inu (CCC:SHIB-USD).
Ethereum developers are having a busy few months as they prepare to roll out the Merge. With the Merge, the Ethereum main network will combine with the recently forked Beacon Chain. The Beacon Chain runs parallel to the main network; it contains all of the upgrades users have been clamoring for, like shards and a proof-of-stake consensus mechanism. Just this past Wednesday, the developers rolled out the Altair upgrade — a test upgrade, and one of the final steps before the long-awaited merge.
Of course, many are linking Ethereum’s all-time high with the Altair update. Indeed, it brings us much closer to finally witnessing the sea change users have been waiting for on the network, and so it is surely a catalyst.
However, one must not overlook how much the Shiba Inu token is influencing the network’s recent gains as well; it seems that the unlikely catalyst is more important to recent gains than one would expect.
Ethereum Prices Rocket Thanks to Massive SHIB Rally
Ethereum bulls who turn their noses up at the SHIB token might have to soften their stance on it with this new all-time high. It appears that SHIB’s huge price rally is one of the leading causes of the increases in Ethereum prices.
Shiba Inu is an Ethereum-based token. This means that whenever a transaction of SHIB takes place, it is recorded on the Ethereum blockchain. This also means that gas fees are paid to the network. And as part of the Ethereum protocol, a portion of gas fees are sent as ETH to a burn address to remove that amount of ETH from the network permanently.
This brings us to the gravity of SHIB’s role in inflating Ethereum prices. SHIB is having a wildly successful handful of months. And, it continues to see broad exposure across social media as a frequent trending Twitter topic. All of the great press is in turn adding up to higher transaction volume of SHIB, which then leads to more burning of ETH.
SHIB sells for about $0.000078 at current prices. Now, consider the fact that SHIB, in the last day alone, has seen a transaction volume of nearly $18 billion. Since the beginning of October, SHIB has seen at least $1 billion in transaction volume per day. That volume is as high as $40 billion on its best days. That’s a lot of ETH being burned.
In fact, it’s so much ETH being burned, Shiba Inu is actually now the third-largest burner of Ethereum in the world, behind Tether (CCC:USDT-USD) and Uniswap (CCC:UNI-USD). With each burn, simple supply-and-demand economics will lead to an increase in Ethereum prices. So next time one sees the value of their ETH holdings on the rise, they have SHIB to thank.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.