Ethereum's pump is attributed to the growth prospects of its ecosystem, not "sucking" Bitcoin.

Ethereum (ETH) experienced an impressive performance in July, soaring from $2,400 on July 1 to a peak of $3,941 on July 27, with a rise of over 60%. Market analysis indicates that this surge was primarily due to the inflow of new capital, rather than the rotation of funds from Bitcoin (BTC). According to crypto quantitative analyst Carmelo Aleman, this rise in Ethereum is unrelated to the outflow of Bitcoin funds, but rather benefits from the strong growth prospects of the Ethereum ecosystem.

Ethereum price surges: Capital inflow drives rise

Ethereum's rise in July was quite remarkable, soaring from $2,400 on July 1 to a peak of $3,941 on July 27, an increase of more than 60%. This surge is particularly noteworthy as it appears to be driven by the influx of new capital, rather than a rotation of funds from Bitcoin (BTC) in the market, a hypothesis that many analysts had suggested previously.

CryptoQuant's analyst Carmelo Aleman pointed out that the current rise of ETH is not due to capital rotation from Bitcoin, but rather the growth potential of the Ethereum ecosystem. Aleman referenced on-chain data, particularly the "Realized Cap" data of Bitcoin, to support this analysis.

(Image source: CryptoQuant)

Bitcoin has achieved a sustained rise in market value

"Realized Market Capitalization" measures the total value of all Bitcoins in the market, based on the price of each Bitcoin at the time of its last transfer, rather than the current market price. This metric provides a more accurate perspective, revealing the capital flow trends of Bitcoin.

Data shared by Aleman indicates that as of July 25, Bitcoin's realized market cap reached a historic high of $1.018 trillion. This data suggests that Bitcoin continues to attract capital inflows rather than outflows. Even with the rise in Ethereum's price, Bitcoin's realized market cap is still steadily increasing, reflecting that capital is continuously flowing into the Bitcoin market.

The rise of the Ethereum ecosystem drives capital inflow

Ethereum's strong performance is also reflected in the rapid growth of its ecosystem. According to DefiLlama, the total value locked (TVL) in Ethereum's decentralized finance (DeFi) platforms soared from $49 billion on April 29 to $84.6 billion on July 29, showing a significant rise.

In addition, on-chain transaction data also shows a similar trend. According to data from etherscan.io, on July 27, the daily transaction volume recorded on the Ethereum network reached 1.48 million, indicating a significant rise in activity.

ETH supply tightening drives price rise

Another factor that may drive the rise in ETH prices is the gradual decrease in the circulating supply of Ethereum. Over the past month, reserves of ETH on centralized exchanges have decreased by about 1 million ETH, intensifying market expectations of "supply tightening."

In addition, the amount of liquid staking on Ethereum has also set a new record, with 35.5 million ETH currently locked in liquid staking protocols, further demonstrating the market's rising demand for Ethereum.

Conclusion: Since July, Ethereum's performance has not only reflected the rise in its price but also demonstrated strong confidence from capital in its ecosystem. With the continuous expansion of Ethereum's decentralized finance platforms, rising trading volumes, and tightening supply, the potential for ETH to rise remains strong. Although the overall market sentiment may fluctuate, the current trend seems to indicate that Ethereum will continue to benefit from capital inflows and ecosystem growth.