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. At current levels near $1,650, ether is up almost 40% on the year.
Although it would be foolish to rule out the possibility ether As the Ethereum blockchain continues to grow ahead of the upcoming Shanghai hard fork upgrade in March, an upgrade that is set to (finally) free up ETH withdrawals, it’s too early to bet that a new bull market is already here and a record high. A return to the $4,800 highs later this year is imminent.
That’s because the three key on-chain metrics that typically shoot higher during an aggressive bull market all remain extremely low. Bulls would do well to tone down their optimism until they hit higher.
Metric 1 – Daily Transactions Still Low
The number of transactions on the Ethereum network on a daily basis remains down compared to last year. The 7-day moving average (DMA) of daily transactions was above 1 million last week, according to data presented by crypto analytics firm The Block, which is still well below the record high of around 1.65 million set in 2021. Trading volume could be a leading indicator of an upside move in ETH price, if/when it happens.
Metric 2 – Slack Active Addresses
The number of daily active addresses (i.e. addresses interacting with the Ethereum blockchain) also remained below levels at this time last year. According to The Block, the 7DMA of active addresses last stood at around 400,000, still well below its all-time high of around 750,000 in 2021. Increase in ETH price. Thus, as mentioned above, a spike in active addresses can be a leading indicator of an Ether rally.
Metric 3 – Address growth remains sluggish
According to data presented by The Block, the number of new addresses created daily on the Ethereum network remains sluggish and below its level this time last year. The 7DMA was last around 67,000. This time last year the 7DMA was around 80,000. As in 2017/2018 and 2021 the rate of creation of new addresses accelerates as the ETH price rises.
Unless there is a significant improvement in each of these on-chain metrics, which collectively act as a proxy for demand for the Ethereum blockchain, it is difficult to make a case for a rally to 2021 record highs.
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