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Ethereum’s On-Chain Metrics Continue to Plunge Despite 20% Bounce

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  • Ethereum has undergone a strong bounce since the lows seen in September.
  • As of this article’s writing, the coin trades for $372, around 20% above those lows.
  • The cryptocurrency is about the set a weekly close above the $365-370 resistance.
  • Despite this strong bounce in the price of Ethereum, on-chain metrics show that the blockchain is currently weakening.
  • Fortunately, the leading cryptocurrency has positive fundamental and technical trends that may result in growth in the future.

Ethereum On-Chain Metrics Are Weakening

Etheruem has undergone an extreme bounce since the lows seen in early September. Despite this, the blockchain’s on-chain trends are weakening.

Santiment, a leading blockchain analytics company, reported on October 11th that the number of daily active addresses on Ethereum is still in a “mild decline.” As can be seen, the metric has dropped by around 50% since topping during the rally in late July:

“$ETH’s daily active address metric is still revealing that there is still plenty to be desired since its peak in late July. There has been a decline in unique addresses interacting on the #Ethereum network, particularly since September 17th.”

Chart of ETH's price action over the past few months with an daily active address overlay shared by Santiment, a blockchain analytics company.

It seems that this decline comes as many users have lost interest in certain aspects of the decentralized finance space.

Ethereum-based yield farming applications were fuel for an influx of users over the past few months. But with many turning out to be scams, unsustainable, or unprofitable for retail users, they may have stopped using them or are seeking opportunities on other blockchains.

Technical Trends Still Strong

Ethereum’s technical trends are strong despite the on-chain weakness.

Brave New Coin’s Josh Olszewicz recently noted that the Ichimoku Cloud on the weekly has flipped green, something that hasn’t been seen since late 2018. This suggests that the cryptocurrency is likely to perform “extremely well” throughout Q2 of 2021 and moving on from there:

“1W $ETH. Cloud green for the first time since late 2018 this bodes extremely well for Q2 2021.”

Chart of ETH's price action over the past few years with analysis by crypto trader josh olszewicz (Carpenoctum on Twitter). Chart from TradingView.com

On a shorter-term basis, ETH is breaking above a falling wedge pattern, which is good for the bull case.

Photo by Ryan Clark on Unsplash
Price tags: ethusd, ethbtc
Charts from TradingView.com
Ethereum's On-Chain Metrics Continue to Plunge Despite 20% Bounce





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Ethereum

Ethereum London upgrade launches on testnet as 100K staked in a day on Eth2

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Ethereum’s forthcoming London upgrade, containing the highly-anticipated Ethereum Improvement Proposal (EIP) 1559, has been deployed on the Ropsten testnet.

Following the June 24 launch on Ropsten, London is now expected to progress through Ethereum’s Goerli, Rinkeby, and Kovan testnets at roughly weekly intervals — from which point the Ethereum community expects a date for mainnet deployment to firm up.

The new upgrade will see transaction fees burned. According EIP-1559 tracking website, Watch the Burn, roughly 88,500 testnet ETH nominally worth $177.6 million has been burned on Ropsten over the day since London’s deployment.

The high rate of Ether being burned on Ropsten has reignited discussion regarding whether EIP-1559 will render Ethereum deflationary — where more ETH is destroyed than new supply enters into circulation — and what this could mean for Ethereum’s price moving forward.

However, EIP-1559 is not the only upgrade that the community is looking forward to from London, with David Mihal of CryptoFees describing EIP-3074 as “fixing one of Ethereum’s most overlooked security issues” to do with approvals.

Related: A London tour guide: What the EIP-1559 hard fork promises for Ethereum

Coincidentally or not, crypto data aggregator, CryptoQuant, identified that 100,000 Ether had been deposited into Eth2’s staking contract around the same time as the launch, worth roughly $200 million.

CryptoQuant also noted that more than 5% of ETH’s supply is currently locked in staking worth approximately $11.75 billion.