ETH has witnessed a significant decrease in its performance over the last week, with a 5.46% decline in value. Currently, Ethereum is being traded at $2480, reflecting a 6.18% drop within a single day.
Previously, ETH had been trending upwards, showing a 1.57% increase on a monthly basis. However, after reaching $2729, the altcoin failed to sustain its positive momentum, resulting in recent losses that almost offset the monthly gains.
These recent price declines are not isolated incidents, as Ethereum has also experienced reductions in other areas, particularly in its active addresses.
Decline in Ethereum’s Daily Active Addresses
According to data from Cryptoquant, Ethereum, similar to Bitcoin, has seen a continuous decline in its daily active addresses throughout the year.
Reportedly, the number of Ethereum’s daily active addresses dropped from a peak of 382k to 312k.
Analysts attribute this decline primarily to the absence of new investors. Despite increased liquidity in 2024 due to the approval of Ethereum ETFs, on-chain activities do not reflect this improvement.
Moreover, the anticipated market rally following the Federal Reserve rate cuts has not materialized, resulting in the absence of new addresses in the market.
Impact on ETH Price Trends
Typically, a reduction in daily active addresses, as noted earlier, correlates with price declines.
However, despite the decrease in active addresses, the current market conditions may pave the way for a significant price recovery for Ethereum.
For instance, the funding rate for Ethereum, as aggregated by exchanges, has steadily increased and remained positive throughout the past week. This indicates a growing demand for long positions as investors foresee potential gains.
The persistence of long positions despite price drops signifies market confidence.
This demand for long positions is further supported by a positive Open Interest Weighted funding rate.
Furthermore, the outflow of Ethereum from large holders has reduced from 311.95k to 139.39k. This suggests that major holders are accumulating assets and maintaining their positions despite the market downturn, reflecting confidence in the altcoin’s future.
Therefore, notwithstanding the decrease in active addresses, ETH has demonstrated resilience in its price performance, indicating an overall positive market sentiment.
As a result, Ethereum could potentially recover and surpass the next significant resistance level at $2668. However, in case of continued decline, ETH is likely to find support at $2728.