burakkesmeci2024-02-15

Ethereum Active Address Count and Price Action Correlation

Historical Correlation: There is a historically observed correlation between Ethereum active address count and price action. An increase in active addresses indicates increased network user activity and transaction volume. This is often associated with rising demand and price increases. 2017 Example: In 2017, Ethereum's active address count surged from 100k to 650k at the peak of the 2018 bull run. This reflected growing user interest and transaction volume on the network, contributing to ETH's price rise to $1400. 2021 Bull Run: With the rise of DeFi in 2020, Ethereum's active address count saw another increase. This surge in user activity and transaction volume played a role in ETH's price reaching $4800 in 2021. Negative Divergence: In May 2021, after a correction, Ethereum's price started to rise again, but this increase coincided with a decline in active addresses. This created a negative divergence between the two metrics. Negative divergence indicates that despite the price increase, network user interest is decreasing. This is often a sign of an unhealthy uptrend. The uptrend until November 2021, accompanied by a decline in active addresses, suggested that it was unsustainable in the long term. In November 2021, both Ethereum price and active address count experienced a simultaneous drop, which can be interpreted as a consequence of the negative divergence. Current Data: Let's analyze Ethereum's price action and active address count over the past year. 12 months ago, ETH's price was around $1600, while the active address count was around 260k. As of February 15, 2024, ETH's price is around $2800 and the active address count is around 380k. While there is some correlation between these two metrics, it's worth noting that historically, the active address count was around 500k when ETH first reached $2800. This suggests that active address count is not yet a strong support for the ETH bull run. Thanks for reading.