Ethereum has been on a wild ride over the past couple of weeks and has been outperforming the largest cryptocurrency, Bitcoin. After an extended period of consolidation, ETH has witnessed a stellar rally of around 88% rising from $236.97 to $445.4 within a month. These gains have been often linked with its correlation with Bitcoin, DeFi expansion, and the use of stablecoins on the blockchain.
Ethereum has proved to be one of the safest long-term assets in crypto, but certain analysts believe its medium-term rally may be under threat. Santiment on Twitter presented its findings through the chart below:
Source: Twitter
As per the data analysis firm, Santiment, Ethereum’s price may undergo correction as the above chart indicated a concerning lack of unique addresses transacting on the network in order to maintain its current market cap.
The daily active addresses have dropped as soon as the price of Ethereum reached the $400 mark, which was suggested by the all-time high of 523,500 addresses registered in terms of daily active addresses on 27 July. However, the DAA fell and the last value recorded of daily active addresses was 410,700, even though the value of the digital asset continued to remain above $400.
Along with high value, other on-chain metrics like transaction count and transaction fees also remained high, which were positive signs for the coin in the long-term. The ETH transaction count marked ATH at 1.34 million this week. This level was previously seen in January 2018, wherein the average price of ETH was $1,042. Santiment added:
“…Earlier this week its transaction count was within shouting distance at 1.27M. $ETH transaction fees also broke all-time highs two days in a row, with fees of 17.8k $ETH (8/12) and 20.3k $ETH (8/13).”
One of the reasons for the daily active addresses to remain low could be the high transaction fees that end up discouraging the interest of traders in the ETH market, along with the intricacies of DeFi. However, unless, Ethereum’s active addresses notice a turnaround and surge again, the viability of Ethereum’s mid-term rally will be put to test, as per Santiment.
