Ethereum
Ethereum Network Falls to 6-Month Low – Here’s How It Affected ETH
- Ethereum fees hit a six-month low over the past seven days.
- ETH was down 6% and the metrics looked bearish.
As L2s gain popularity, Ethereum [ETH] network usage plummets, reaching its lowest level in six months.
This aligned with Vitalik Butarin’s 2020 roadmap, which aimed to improve scalability by offloading transactions from the mainnet.
In the meantime, ETH bears entered the market and pushed down the price of the token.
Ethereum network activity declines
IntoTheBlock recently published a Tweeter highlighting the fact that ETH fees fell this week to their lowest level in 6 months, as they fell by over 29%.
The drop in ETH fees reflects a shift in activity to more than 50 live Layer 2 networks. To see what’s happening with Ethereum, AMBCrypto analyzed Artemis data.
Notably, overall activity on the network fell, while daily active addresses on the blockchain declined last week.
Source: Artemis
Daily ETH transactions also followed a similar trend. The drop in fees also led to a decline in blockchain revenue last week.
In particular, it was surprising to see the use of blockchain decline when the price of gas fell. According to Ychartsthe gas price of ETH has fallen from 47.5 Gwei to 8.5 Gwei over the past month.
Ethereum turns bearish
As the blockchain’s network activity declined, its price action also turned bearish. According to CoinMarketCapthe price of ETH has fallen by more than 6% in the last seven days.
At the time of writing, it was trading at $2,920.99 with a market cap of over $350 billion.
AMBCrypto’s examination of Glassnode data revealed a possible reason behind this price drop. We noticed that the number of ETH addresses with balances above $100,000 has decreased over the last seven days.
This clearly indicated that the whales were selling their properties.
Source: Glassnode
Not only the whales but also the selling sentiment was overall dominant in the market. Our analysis of Sentiment data highlighted that ETH trading flow increased twice last week.
In addition, its supply on the exchanges has increased. This hinted at a sell-off, which could have triggered the price correction.
The negative price development also had a negative impact on market sentiment. Ethereum’s weighted sentiment has fallen over the past few days, suggesting that bearish sentiment around the token was dominant.
Source: Santiment
AMBCrypto then analyzed the daily chart of ETH to see if a further price decline is likely to occur.
We found that its relative strength index (RSI) was below the neutral mark. Its Money Flow Index (MFI) also recorded a slight decline.
Read Ethereum [ETH] Price prediction 2024-25
The king of altcoins was resting below its 20-day simple moving average (SMA) at press time, indicating further price declines.
ETH price has touched the lower limit of the Bollinger bands, which can trigger a trend reversal.
Source: TradingView