Ethereum’s Bullish Momentum and On-Chain Challenges: A Comprehensive Analysis
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Ethereum’s Market Dynamics and User Engagement Concerns
Ethereum has recently experienced a bullish trend, contributing to the broader cryptocurrency market’s momentum. However, despite a temporary surge in Ethereum’s price, the network struggles with limited user engagement. This is occurring even in the wake of critical updates designed to enhance Ethereum’s performance and attractiveness.
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Lagging On-Chain Activity in the Ethereum Network
Glassnode, a prominent on-chain data analytics platform, has released a concerning report about Ethereum’s current network activity. While Ethereum’s price has shown resilience amidst market volatility, the on-chain data presents a contrasting narrative.
According to Glassnode, Ethereum’s on-chain performance has been persistently weak, raising questions about the network’s core ecosystem potentially losing its momentum. Despite positive developments and upgrades, network activity remains subdued.
The platform highlighted that recent updates, such as the Pectra upgrade, have not yet sparked increased engagement on the network. “Ethereum’s Pectra upgrade hasn’t translated into a spike in network engagement just yet,” Glassnode reported.
The Pectra Upgrade, launched with the goal of improving scalability and efficiency, includes the Prague execution layer hard fork and the Electra consensus layer upgrade. However, even with these enhancements, user attrition has not improved, and the number of new or returning users has not increased, according to the ETH Month-over-Month activity Retention metric.
Data from Glassnode shows a decline in the average number of new and revived addresses since the upgrade, with new addresses dropping by approximately 1.8% and resurrected addresses decreasing by 8.4%. Additionally, user churn has fallen by about 8.5% over the same period. It remains uncertain if these trends are directly related to the network upgrades or broader market cycles.
Potential Market Breakout After Short-Term Adjustments
Despite the weakened network activity, Ethereum’s price trajectory remains promising, with potential for further gains. On-chain analyst ShayanMarkets has forecasted a breakout to the upside as Ethereum’s market approaches the $2,500 mark, although a short-term correction is anticipated beforehand.
Using a bubble chart to analyze trading volume across all cryptocurrency exchanges, the analyst identified an overheating scenario at the $2,500 resistance level, which has now become a support level. This is largely due to profit-taking and the resting supply at this critical zone.
The overheated market condition suggests the likelihood of a brief decline as the market cools, allowing for new accumulation opportunities. Shayan’s analysis indicates that the recent surpassing of the $2,500 threshold is probably driven by fresh demand.
Currently, Ethereum is trading at $2,549 on the daily chart, reflecting these market dynamics.
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