Active Ethereum Addresses Hit 2020 Levels, Will Price Follow?

Ethereum active addresses continue to drop. This follows the market crash, with the price of Ethereum falling below $1,000 before recovering again. This decline shows a variety of effects on digital assets, as well as how investors feel about digital assets.

Activity drops to 2020 lows

Data from Block shows that, Event address It has been shutting down for 7 consecutive days on the Ethereum network. These active addresses hit all-time highs back in June 2021 when the bull market was in full swing. The increase in active addresses is attributed to new investors entering the digital asset, as it has been a huge success so far.

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However, as the price of the digital asset started to fall, so did the active addresses. This peaked in mid-June 2022, when the crypto market experienced arguably its worst market crash in more than a decade. Ethereum quickly fell from around $1,800 and hit lows below $900.

Active addresses have since increased as investors scrambled to move funds to avoid further losses. However, as the sell-off subsided, the number of active addresses also dropped sharply.

ETH active addresses decline | Source: The Block

Last week, it hit a two-year low with 403,380 active addresses on Ethereum for seven straight days. This is in line with the number of new addresses on the network on the same rolling basis, which also fell to December 2020 lows.

Ethereum responds

With the new week just beginning, the impact of the drop in active addresses remains to be seen. However, it does show what investors might be doing with their holdings. One of them could be a sign that the sell-off that rocked the market recently has softened. Therefore, most investors did not move their tokens for the sell-off.

Ethereum Price Chart by TradingView.com

If it follows historical trends, it could also mean an imminent recovery for the digital asset. Given that the number of active addresses was so low at the last time, just before the 2021 bull run, the cessation of the sell-off is sure to see the cryptocurrency retrace to the upside.

Related reading | Leading cryptocurrency exchange sees negative funding rates, have bears taken over?

However, if there is a recovery on the charts, it will be an uphill battle given resistance above $1,200. If ETH can break this resistance, it will put it above the 20-day moving average, providing the momentum needed to retest $1,500.

Featured image from Admiral Markets, chart from TradingView.com

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