Ethereum Network Activity Hits Peak, but Why This Is Not Necessarily a Bullish Signal

The Ethereum community is experiencing its most energetic section so far. However, this doesn’t essentially point out a bullish outlook. Recent on-chain information reveals Ethereum reaching a main milestone as switch counts hit a report high. Historically, comparable alerts haven’t all the time led to optimistic worth efficiency.

In addition, a sharp spike in alternate inflows raises issues that promoting strain has not but subsided.

How Does Ethereum’s Current Situation Compare to 2018 And 2021?

Entering February, CryptoQuant information reveals that Ethereum Transfer Count—the full variety of token transfers—measured by a 14-day shifting common, reached a report degree of 1.1 million.

At first look, this determine seems promising. It suggests sturdy community development and broader adoption of Ethereum.

However, deeper evaluation signifies this will not be the bullish sign many anticipate. Instead, it might level to a correction section and even a cyclical worth peak, primarily based on historic precedents.

CryptoQuant analyst CryptoOnchain highlights two intervals when heightened Ethereum community exercise signaled market tops.

• On January 18, 2018, on the peak of the ICO increase, Ethereum transaction counts surged. Shortly afterward, ETH collapsed from round $1,400 to beneath $100 by the top of the yr. This decline dragged all the crypto market into a two-year “crypto winter.”
• On May 19, 2021, amid the explosive development of DeFi and NFTs, the metric reached one other report high. The market then reversed sharply, with ETH falling from above $4,000 to beneath $2,000.

The reasoning is simple. Increased ETH motion usually signifies that extra buyers are withdrawing funds from wallets, usually in massive transactions. This habits might mirror makes an attempt to promote amid deteriorating future expectations.

“The present situation bears a hanging resemblance to the setups seen in 2018 and 2021. While the macro atmosphere modifications, the on-chain habits of community individuals suggests we’re in a zone of high danger,” CryptoOnchain stated.

This view is additional supported by a spike in Ethereum Exchange Inflow (Top 10) as ETH dropped beneath $2,300 in early February.

Ethereum Exchange Inflow (Top 10) measures the full quantity of cash from the ten largest influx transactions to exchanges. High values point out a rise in buyers depositing massive quantities directly. This usually alerts rising promoting strain and the chance of additional worth declines.

On February 3, this metric surged to 1.3 million, the very best degree in a yr. Two days later, ETH fell from $2,230 to beneath $2,100.

According to evaluation from BeInCrypto, a confirmed development reversal would require Ethereum to recover to at least $3,000. In the brief time period, ETH might proceed to decline toward the $2,000 support level, as promoting strain stays unresolved.

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