Ethereum network activity doubles as ETH price lags behind
The Ethereum network is showing a significant increase in activity despite the weak price performance of ETH. The number of active addresses exceeded 1.1 million in February, more than double the level seen a year earlier.
At the same time, the number of token transfers has increased, according to CryptoQuant.
In March, the number of transactions surpassed 1 million, compared with about 750,000 in December. The number of smart contract calls is also growing rapidly. This reflects the expansion of the DeFi ecosystem, stablecoins, and automated protocols. The development of layer-2 networks is also increasing the overall load on Ethereum’s infrastructure.
Stablecoin usage boosts network activity
Additional growth in activity is linked to the use of stablecoins. Lisk’s head of research Leon Waidmann noted that the use of USDC on the Ethereum network has reached a new all-time high. Data from Token Terminal also confirms the increase in transaction volumes involving the stablecoin.
USDC remains one of the key liquidity instruments within the Ethereum ecosystem. It is widely used in DeFi protocols, trading, and payments. The expansion of these services increases the load on the network. However, the growth in activity has not been accompanied by a similar increase in the price of ETH.
Analysts describe an “adoption paradox”
CryptoQuant’s head of research Julio Moreno described the current situation as an “adoption paradox.” Despite record levels of network activity, the price of ETH remains nearly 60% below its all-time high.
According to the analyst, this shows a disconnect between network usage and the asset’s market performance. Previously, it was widely believed that rising activity would directly increase demand for the token. However, current data challenges this assumption. The network can be heavily used without a corresponding increase in price.
ETH price depends on capital flows
CryptoQuant notes that capital flows, rather than network metrics, remain the key driver of ETH’s price. Ethereum’s realized capitalization has turned negative on a yearly basis. This suggests that capital is gradually leaving the asset.
ETH is currently trading slightly above $2,000 and remains within a range similar to the bear market conditions of 2022–2023. At the same time, weakness is not limited to Ethereum. The entire crypto market has fallen by about 44%, losing roughly $2 trillion since the October peak. Many altcoins have declined by up to 80% amid shrinking liquidity and rising geopolitical risks.
Recently we wrote that the total cryptocurrency market capitalization is holding near $2.37 trillion despite a slight decline of about 0.45% over the past 24 hours, while the Fear & Greed index stands around 25, remaining in the fear zone but showing a gradual improvement in investor sentiment.
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