Ethereum Bulls: Beware These 3 On-Chain Metrics Before Going Bullish
• Ethereum (ETH) has enjoyed an excellent start to 2023, rallying in tandem with the broader cryptocurrency market.
• Three key on-chain metrics that typically all shoot higher during an aggressive bull market all remain very subdued.
• Unless there is a significant improvement in each of these metrics, bulls may have to temper their optimism for a return to ETH record highs later this year.
Ethereum Price Rally
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 close to $1,650, Ether is close to 40% higher on the year.
Key On-Chain Metrics
While it would be foolish to exclude the possibility that Ether continues to rally ahead of the Ethereum blockchain’s upcoming Shanghai hard fork upgrade in March, an upgrade that is set to (finally) free up ETH withdrawals, it may be too early to bet that a new bull market is already here and a return to record highs in the $4,800s later this year is imminent. That’s because three key on-chain metrics that typically all shoot higher during an aggressive bull market all remain very subdued. Until they do turn higher, bulls would do well to temper their optimism.
The number of transactions taking place on a daily basis on the Ethereum network remains below where it was this time last year. That’s according to data presented by crypto analytics firm The Block; The 7-Day Moving Average (DMA) of daily transactions was last just above 1 million, still well below the record highs hit in 2021 of around 1.65 million. A pick-up in transactions could be a lead indicator for a pick-up in the ETH price if/when it happens.
The number of daily active addresses (i.e., addresses interacting with the Ethereum blockchain) also remains below its level of this time last year according to The Block; The 7DMA of active addresses was last around 400,000 still well below its record high of around 750,000 in 2021 Spikes in the number of active addresses like those seen late 2017/early 2018 and 2021 tend to coincide with upticks in ETH price thus as with above a spike could be lead indicator for rally
New Address Creation
The number of new addresses being created on Ethereum network each day remains sluggish and below its level this time last year per data provided by The Block; The 7DMA was last around 67000 This time last year 7DMA was around 80000 Rate new address creation tends spike along side rallies like seen 2017/2018 & 2021 Unless there’s significant improvement these 3 metrics bull should consider tempering optimism return ETH record highs later this yr