tl;dr
User activity on Ethereum's Layer-1 network has dropped to a year-to-date low, coinciding with ETH's value falling below $3,000 for the first time since November. The decrease in active addresses on the Ethereum network suggests reduced user engagement, potentially leading to a further decline in ET...
Ethereum's User Activity Decline and Price Outlook Ethereum experiences a significant decline in user activity and value, raising concerns for its short-term price outlook.
Reduction in active addresses on Ethereum network contributes to bearish sentiment, indicating potential price decline.
Increase in circulating supply of ETH adds downward pressure on price, with negative Balance of Power indicating strong selling pressure.
Market analysis suggests potential further price drop for ETH, with support level at $2,500 and positive market trends offering hope for price increase.
User activity on Ethereum's Layer-1 network has dropped to a year-to-date low, coinciding with ETH's value falling below $3,000 for the first time since November.
The decrease in active addresses on the Ethereum network suggests reduced user engagement, potentially leading to a further decline in ETH's price.
The negative Balance of Power (BoP) on the daily chart indicates strong selling pressure, with ETH trading at $2,595 and a potential further drop to $2,500 or $2,224 if the downtrend continues.
However, a positive market shift could propel ETH's price to $2,811.
The decrease in user activity is attributed to lower transaction volumes and reduced engagement with decentralized applications on the blockchain, potentially making ETH more inflationary due to a drop in demand.
Additionally, an increase in ETH tokens entering circulation has led to a price drop, with 12,066 ETH, valued at over $31 million, added to the circulating supply in the past week.
Overall, the outlook suggests potential further price decline for ETH, influenced by reduced user activity and negative market indicators.
Amid the broader market downturn, user activity on the Layer-1 (L1) network Ethereum has plummeted to its year-to-date low.
This comes as the value of Ethereum’s native token, ETH, sinks below the $3,000 mark for the first time since November.
With a strengthening bearish sentiment, ETH could extend its price decline in the short term.
ETH fell to a five-month low of $2,143 before making a slight rebound, with a reduction in the active addresses on its network being a key contributing factor to ETH’s struggles.
The daily count of active addresses on the Ethereum network fell to a year-to-date low of 420,346 on February 2, suggesting reduced user activity on the network, leading to lower transaction volumes and engagement with decentralized applications.
The drop in demand can weaken ETH’s price momentum, as fewer transactions mean less network utility and a reduced burn rate, making ETH more inflationary.
The altcoin’s circulating supply has added 12,066 ETH over the past week, leading to a price drop. When more ETH tokens enter circulation, the overall supply available for purchase rises, typically resulting in a price drop as the increased supply can exceed demand.
ETH trades at $2,595 at press time, noting a 16% price drop over the past 24 hours, with the coin’s negative Balance of Power (BoP) on the daily chart reflecting strong selling pressure.
If the downtrend continues, ETH’s value could fall to $2,500, with a potential further drop to $2,224. However, a positive shift in market trends could propel ETH’s price to $2,811.