• Ethereum (ETH) has enjoyed an excellent start to 2023, rallying in tandem with the broader cryptocurrency market.
• Three key on-chain metrics that typically all shoot higher during an aggressive bull market all remain very subdued.
• Until these metrics turn higher, bulls should temper their optimism for a return to record highs in the $4,800s later this year.
Ethereum Price Rally
Ether (ETH), the cryptocurrency that powers the smart-contract-enabled Ethereum blockchain, has enjoyed an excellent start to 2023, rallying in tandem with the broader cryptocurrency market. At current levels close to $1,650, Ether is close to 40% higher on the year.
On-Chain Metrics
While it would be foolish to exclude the possibility that Ether continues to rally ahead of the Ethereum blockchain’s upcoming Shanghai hard fork upgrade in March, three key on-chain metrics suggest ETH price upside may be hard to sustain: daily transactions still remain below last year’s levels; active addresses are languishing; and address growth remains sluggish compared to 2021 levels. Unless there is a significant improvement in each of these metrics, bulls would do well to temper their optimism for a return to record highs later this year.
Daily Transactions
The number of transactions taking place on a daily basis on the Ethereum network remains below where it was this time last year according to data presented by crypto analytics firm The Block. The 7-Day Moving Average (DMA) of daily transactions was last just above 1 million – still well below its record high from 2021 of around 1.65 million – suggesting that without a significant increase in transaction activity, bullish momentum may be difficult for ETH prices going forward.
Active Addresses
The number of daily active addresses interacting with the Ethereum blockchain also remains below its level from this time last year according The Block’s data. The 7DMA of active addresses was last around 400k – significantly below its peak from 2021 of 750k – indicating that unless there is a noticeable uptick in engagement with Ethereum’s network over coming weeks or months bullish momentum could struggle going forward as well.
Address Growth
The number of new addresses being created on the Ethereum network each day also remains sluggish compared with 2021 levels according The Block’s data. The 7DMA was last around 67k – lower than 2020’s 80k – suggesting that unless address creation increases substantially soon Ether may find it hard push much further ahead from its current price point near $1,650
