- Ethereum has experienced a sudden surge in a key network metric.
- The surge has foreshadowed price reversals in the past.
- ETH remains under significant pressure.
Following the excitement experienced in Q1 2024, the crypto market has faced significant uncertainty, as dreams of an “up only” run have come face to face with seemingly unending corrections. In recent weeks, much of the focus of this market uncertainty has been on Ethereum, the second largest crypto asset, as some suggest that the asset may have lost its value proposition amid changing network dynamics.
However, as the debates over ETH’s viability continue, a recent surge in a key on-chain metric offers hope of a potential resurgence.
Ethereum Seeing Growing Interest?
Ethereum has recently seen a sudden spike in interest. On Sunday, September 8, the network recorded the creation of over 126,000 new wallets, the highest network growth in four months according to Santiment Feed data, a feat made more impressive by the fact that it occurred on what the crypto analytics platform described as “the least active day of the week.”
Sponsored
While the reason for the growth spike remains unclear, Santiment has tipped it as a potential reversal signal for the asset, which fell from highs of over $2,500 to below the $2,200 price point at one point last week. The view comes as spikes in this metric have historically increased the chances of a bounce.
Still, Santiment warned traders of the dangers of relying on a single metric. This warning is particularly poignant as ETH appears to be under significant selling pressure.
ETH Whales Demonstrating Market Top Behavior
Despite Ethereum’s failure to reclaim its previous all-time high like Bitcoin in the Q1 rally, recent Ethereum whale activity indicates that they may already believe that the ETH top for this cycle is in. According to Glassnode data recently shared by prominent crypto analyst Ali Martinez, ETH whales stopped accumulating in early July 2024 and have been distributing since.
This is likely the stark opposite of what many investors would have anticipated as spot ETFs tipped to usher a flurry of institutional demand for ETH launched within the same month.
ETH’s recent woes are compounded by uncertain macroeconomic conditions. Recently, investors have rushed to take funds out of risk markets over fears that a decades-long trading strategy that involved leveraging cheap Japanese yen loans may be unraveling.
At the time of writing, ETH continues to trade around the $2,300 price point, representing a marginal 0.68% increase in the past 24 hours.
On the Flipside
- Trading on a single metric can be misleading.
- Like Ethereum, most other altcoins have also failed to reclaim their former glory in the recent market cycle, trading over 50% below previous highs formed during the 2021 bull market peak.
Why This Matters
Ethereum’s continued underperformance of fellow market leaders Bitcoin and Solana over the past year has frustrated many investors. The recent surge in network growth could indicate shifting market tides, but this potential has to be weighed in the context of prevailing market conditions.
Read these for more on Ethereum:
VanEck Ether Futures ETF to Shut Down: Here’s What You Need to Know
Why Ethereum’s Vitalik Is Steering Clear of L2 Investments for the “Foreseeable Future”