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Ethereum has seen an impressive gain of over 56% in July, marking its highest monthly increase since 2022. The cryptocurrency reached a peak price of $3,862, fueled by ETF inflows exceeding $5.37 billion over a consecutive 19-day period.
Notably, the largest single-day inflow occurred on July 16, recording $727 million. This rally brought BlackRock iShares ETHA to the spotlight, and it is now the third-fastest crypto ETF to reach more than $10 billion in assets under management, in an impressive 251 days.
The strength of the new institutional demand points to Ethereum's changing status in the wider crypto story. In comparison to Bitcoin, which is commonly viewed as digital gold, Ethereum is a stock similar to a 90s tech growth stock.
A top ETF analyst at Bloomberg, Eric Balchunas, has said that Ethereum is currently on a momentum that indicates rebalancing within the institutional investment spectrum. In the process, investors are more comfortable with Ethereum and its dynamic growth, rather than using Bitcoin as a store of value.
This changing perception has the potential to see Ethereum emerge as an attractive means of gaining exposure to blockchain innovation and decentralized applications.
However, there are some questions regarding the sustainability of this rally. Markus Thielen, the CEO of 10x Research, noted that though the price of Ethereum was on the increase, its network fundamentals showed little improvement. The network's revenue increased by 3% only in July, and the on-chain activity increased by 5%. These minor profits contrast to the explosion of advertisements in the value of the cryptocurrency.
Also Read: Ethereum Comeback Trail: Will This Support Spark a Rally?
A closer look will also indicate that a large percentage of the Ethereum price change occurred during Asian trading, which translates to about a 90% increase in July alone. This concentration raised questions about speculative activity and short-term volatility.
In historical terms, Ethereum's yield has been decreasing over the last year: it was 6% in November 2021 and has now moved down to 1.6%. This has been going down due to a reduced revenue base despite the increase in market capitalization. Since the value of Ethereum now depends on continuous capital inflow, analysts warn that a lack of interest in ETFs would affect price stability.
