Why Is Ethereum Rising? Key Reasons Behind Its Strong August Rally Toward All-Time Highs

Ethereum Current Price Overview

Chart: https://www.gate.com/trade/ETH_USDT

As of August 21, 2025, Ethereum is trading at approximately $4,318.11 USD, up nearly 6% from the previous day. Another major platform reports a price of about $4,329.97 USD, with 24-hour trading volume exceeding $52 billion. Overall, ETH is exhibiting strong upward momentum.

Main Drivers of ETH’s Price Increase

1. Network Upgrades and Deflationary Mechanisms

Following the Ethereum Merge, the introduction of the EIP-1559 fee burn mechanism and the upcoming Pectra upgrade in 2025 have further reduced ETH issuance and increased the burn rate. This has resulted in a net deflationary environment. This scarcity is driving ETH’s price appreciation.

2. Institutional and Whale Accumulation

Recently, large holders and institutional players have shifted allocations from Bitcoin to Ethereum, removing ETH from circulation, which has in turn driven up demand. These investments in ETH are motivated by both portfolio diversification and confidence in Ethereum’s long-term ecosystem potential.

3. ETF Inflows and Increased Market Liquidity

The launch of Ethereum spot and derivatives ETFs has expanded institutional access, attracting more capital inflows. Net ETF inflows have exceeded $1 billion on certain trading days, which directly boosts ETH demand.

4. Market Technical Indicators and Bullish Sentiment

Despite short-term corrections—such as ETF outflows or institutional profit-taking pushing ETH below $4,200—technical indicators remain robust. Futures premiums are steady, and on-chain data like total value locked and transaction fees support a sustained recovery.

Long-Term Bullish Outlook

Looking forward, increasing adoption of on-chain applications—especially those driven by AI—and the growing activity of Layer-2 scaling solutions could continue to trigger deflationary mechanisms and enhance Ethereum’s network utility. If current trends persist, some forecasts predict that ETH could surpass $5,000 and potentially move even higher.

Summary: Key Points for Beginners

• Network upgrade milestones and their impact on ETH burning
• ETF inflows/outflows and institutional allocation
• On-chain indicators and supply-demand dynamics
• Support levels: $4,100–4,200; Resistance levels: $4,700–5,000