ETH Falls Under $3K as Network Activity Reaches Yearly Low
User activity on Ethereum 's Layer-1 network has reached its lowest point this year, amid a wider market downturn. Correspondingly, the value of Ethereum's native token, ETH, fell below $3,000 for the first time since November. This decline reflects a strong bearish sentiment that may persist, potentially causing further short-term price decreases.
On February 2, ETH hit a five-month low of $2,143 before partially recovering. This price drop is part of a larger market slump, but a notable factor is the reduced number of active addresses on the Ethereum network.
According to Glassnode, the number of daily active addresses reached a year-to-date low of 420,346 on February 2.
A decline in active addresses indicates reduced user activity, signifying lower transaction volumes and decreased engagement with decentralized applications on the blockchain. This drop in demand could weaken ETH's price momentum, as fewer transactions translate to less network utility and a decreased burn rate, making ETH more inflationary. Over the past week, the circulating supply of ETH increased by 12,066 tokens.
Sources like Ultrasoundmoney report that 12,066 ETH, valued at over $31 million at current market prices, were added to the circulating supply in the past seven days. Such an increase in supply can lead to a price drop if it surpasses demand.
Currently trading at $2,595, ETH has seen a 16% price decline over the past 24 hours. The negative Balance of Power (BoP) indicator, at -0.38, reflects significant selling pressure. The BoP analyzes price movements to gauge buyer versus seller strength. A negative reading indicates seller dominance, suggesting continued bearish momentum.
Should this downtrend persist, ETH might drop to $2,500. A failure to maintain this support level could result in a further decline to $2,224. Conversely, an uptick in market trends could increase ETH's price to $2,811.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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