The drop in daily active Ethereum addresses is due to the fact that the price of ETH remains stable, which raises concerns about a possible fall in the future.
Ethereum has witnessed a significant drop in daily active addresses (DAAs) over the past four months, raising concerns about a further decline in the value of Ethereum.
price in the coming weeks
Ethereum price stagnation scares investors
On October 21, Ether DAA dropped to 152,000, the lowest level since June, according to data provided by Santiment. In other words, the drop showed fewer unique Ethereum addresses interacting with the network.
The daily active Ethereum address is counted in the daily timeframe. Source: Sentiment
Interestingly, the drop came after Ethereum corrected 80% from its November 2021 high of around $4,850. This coincidence could mean two things: Ethereum users decided to leave the market after the market fell and/or suspended interaction with the blockchain network.
Santiment analysts note that “weak hands”, emotional traders who leave the market during a downtrend or recession phase, are responsible for the fall.
“Apathy is high as [Ethereum] prices stalled.”
Notably, the Ether price has been trading in the $1200-$1400 range for over a month now, accompanied by a drop in weekly trading volumes.
Apathy among investors can also be seen in Ethereum-based mutual funds. According to the latest weekly report from CoinShares, for the week ending October 14, these funds recorded $3.9 million in outflows.
Capital flows in and out of crypto funds. Source: CoinShares
In addition, the total value of these outlets since the beginning of the year (from the beginning of the year) amounted to $368.70 million.
ETH price drop by 40% in the game
Cryptocurrency prices fell throughout 2022, along with other riskier assets, caused by the tightening of policies by world central banks to curb rising inflation. However, they risk further declines as inflation remains high and will lead to further rate hikes going forward.
Ethereum may suffer due to macro risks associated with inflation. In other words, ETH/USD could fall below the dominant uptrend support line, triggering a classic continuation setup called an ascending triangle, as shown in the chart below.
ETH/USD weekly price chart with ascending triangle breakout setup. Source: Trading View
The profit target of an ascending triangle formation is measured after the breakout point is added to the maximum distance between horizontal trendline resistance and ascending trendline support. As a result, the ETH downside target is around $750, which is 40% below current price levels.
Related: Why did the crypto market crash today?
Conversely, a bounce off the lower trendline can cause the Aether eye to head towards the upper trendline. In other words, a rise to $1,800 in October, up 40% from current prices.
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