Ethereum Bulls beware! These 3 key on-chain metrics suggest that ETH price upside may not be easy to sustain
Ether (ETH), the cryptocurrency that powers the smart-contract-enabled Ethereum blockchain, has enjoyed an excellent start to 2023, rallying in tandem with the broader cryptocurrency market. Ether is almost 40% higher than the year at current levels of $1,650.
It would be foolish not to consider the possibility that Ether will continue to rally ahead the Ethereum blockchain’s upcoming Shanghai fork upgrade, which is set to (finally), free up ETH withdrawals. However, it is possible that a new bullmarket is already here, and a return at record highs in $4,800s later in the year.
Three key on-chain metrics, which tend to all shoot higher in an aggressive bull market, remain subdued. Bulls should temper their optimism until they rise.
Metric 1 – Daily Transactions Still Subdued
The daily transactions on Ethereum remain below the level of last year. According to data from crypto analytics firm The Block the 7-day moving average (DMA), of daily transactions, was last just over 1 million. This is still below the 2021 record of 1.65 million. If/when the ETH price rises, a pickup in transactions could indicate a potential pick-up.
Metric 2 – Active Addresses Languish
Daily active addresses, i.e. The number of daily active addresses (i.e., addresses that interact with the Ethereum blockchain) is also below last year’s level. According to The Block the 7DMA number of active addresses was last at 400,000. This is still far below its record high of 750,000 in 2021. ETH price increases are often accompanied by spikes in active addresses. This is evident in recent years (early 2018/late 2017) and 2021. As mentioned above, an increase in active addresses could indicate an Ether rally.
Metric 3 – Address Growth Remains Slow
According to data from The Block, the number of Ethereum addresses created each day is still slow and lower than it was last year. Last year, the 7DMA was around 67,000. The 7DMA was at 80,000 last year. As was the case in 2017/2018, and 2021, the rate at which new addresses are created tends to rise in tandem with increases in the ETH price.
It is hard to argue for a return to the record highs of 2021 unless there is significant improvement in all these on-chain metrics.