Ethereum has recently been making new attempts to recover. Here’s what on-chain data suggests as to whether this practice is sustainable:
Both Ethereum network growth and utility have risen recently.
According to data from on-chain analytics firm st tly, the ETH blockchain has recently shown encouraging trends in daily active addresses and network growth. These two metrics are used to track the usefulness and growth of the chain.
The first of these, “Daily Active Addresses,” measures the number of unique addresses that engage in some kind of transactional activity on the blockchain each day.
This number of unique addresses can be considered similar to the number of unique users participating in the network, so the value of the indicator can give a hint about the intensity of traffic that Ethereum is currently witnessing.
Another indicator of interest here is “network growth,” which tells us the number of daily addresses performing transactions on the blockchain for the first time.
These new addresses typically correspond to new investors coming into the cryptocurrency, so the value of network growth can provide a hint as to how adoption of the asset is progressing.
Now here is a chart showing Ethereum daily active addresses and network growth trends over the past few months:
Looks like both of these metrics have seen growth in recent weeks | Source: Santiment on X
Looking at the graph, we can see that Ethereum’s daily active addresses and network growth have been steadily increasing recently. After the increase, the chain is now seeing 101,000 new addresses appearing every day and 484,000 unique addresses being traded per day.
This suggests that the cryptocurrency is not only receiving significant interest from existing users (as they move across the network), but also from new investors. “Increasing utility is a key pillar justifying the increase in ETH market capitalization,” says Santiment.
On-chain analytics firm Glassnode discussed activity occurring on the Bitcoin blockchain in its latest weekly report. Below is a chart shared by Glassnode that shows the trend in the 7-day moving average (MA) number of active entities for the original cryptocurrency.
The value of the metric appears to have been relatively low in recent days | Source: Glassnode's The Week Onchain - Week 5, 2024
This metric is similar to Daily Active Addresses, except that it tracks “active entities” instead of addresses. Entity means a group of addresses that Glassnode considers to belong to the same investor.
As the chart shows, active companies have recently plummeted to Bitcoin’s cyclical lows. This appears to be an increase in utility, unlike what we have observed for Ethereum.
However, the analytics firm explains, “At face value, this may suggest that despite significant price increases, the growth of Bitcoin users has not followed suit.”
“This is primarily a result of increased activity related to ordinal numbers and inscriptions, with many participants reusing Bitcoin addresses and reducing the number of ‘active entities’ measured (without double counting).”
ETH price
Ethereum has recently attempted to recover, but the coin has plummeted over the past day, dropping the asset’s price to around $2,300. However, given the strong network activity, there is likely hope that the rally will continue.
The price of the coin appears to have plummeted during the past 24 hours | Source: ETHUSD on TradingView
Featured image by Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com, Santiment.net