On-chain data shows a significant surge in Ethereum active addresses recently. Here’s how this affects the ETH price:
Recently, the number of daily active addresses on Ethereum has skyrocketed.
According to data from on-chain analytics firm st tly, ETH active addresses are currently at their second highest level since mid-September. An “active address” here means an address on the Ethereum blockchain that engages in some kind of transaction activity.
In the context of the current discussion, the unique numbers of these active addresses are important. This metric takes both sender and receiver into account.
Active addresses can be considered similar to unique users present on the network, so their numbers can give a hint as to how much traffic the chain is currently observing.
A high value of the indicator means that the ETH network is currently receiving a lot of traffic. This could be a sign of high interest in the asset among traders.
On the other hand, a low indicator means that the market is not currently interested in the asset because not many users are currently participating in the blockchain.
Now here is a chart showing the trend of Ethereum active addresses over the past month:
The value of the metric seems to have been quite high in recent days | Source: Santiment on X
As shown in the graph above, the Ethereum active address indicator has recently surged, meaning that many holders have started participating in transactions.
It’s difficult to say exactly how this latest activity will affect asset prices, as addresses are active whether investors are selling or buying, but generally speaking, a high-traffic environment is an environment prone to volatility.
Looking at the chart, we can see that active addresses also spiked to high levels earlier this month. Ethereum initially had a strong rally coupled with increased user participation, but then the asset peaked and the indicator began to decline shortly after reaching its peak.
An indicator that could help predict such a downturn in advance could be the total supply in wallets across all exchanges. Investors typically transfer coins to these platforms for selling purposes, so an increase in this indicator could be a sign that a sell-off is underway.
And of course, as the asset suffered the aforementioned decline, supply on exchanges surged. As the graph shows, Ethereum has yet to see such a surge this time around, suggesting that the current address activity could be a buy signal.
If this is true, this high traffic could potentially fuel a rally and help Ethereum visit higher levels.
ETH price
As of this writing, Ethereum is trading just below $2,000, down 3% over the past week.
ETH has been moving sideways recently | Source: ETHUSD on TradingView
Featured image by Kanchanara on Unsplash.com, chart by TradingView.com, Santiment.net