Can Ethereum Recover from the Post-Merge Doldrums? The weeks leading up to The Merge saw a strong rally in the token. And by extension, the entire crypto market. If the ETH token has risen above $2,000, it has experienced a strong correction since the merger took effect. The famous precept “Buy the rumor, sell the news” seems to have struck again. But what about the short and medium-term future of Ethereum? We will see that several parameters send opposite signals.
The number of new addresses is on the rise again!
As illustrated by the following graph available from the Glassnode platform, the volume of new Ethereum addresses (in blue) has exploded in recent days:
During the last rise in the price of Ethereum, which began in mid-July, the volume of new addresses followed this rise. It was at that time the first announcement of a specific date for the merger.
As we see graphically, it was the price that drove users to create new addresses. A situation that seems very different today. Nevertheless, it is clear that historically, there is a correlation between the price of Ethereum and the volume of new addresses.
Yesterday, Glassnode published a tweet stating that the number of new Ethereum addresses had just reached a monthly high. With 3,001,804 new addresses created in September on the Ethereum network.
Ethereum is more and more cited on the networks!
The Merge event will undoubtedly have thrown a real spotlight on the Ethereum blockchain. For many, the merger and the transition from Proof of Work to Proof of Stake are also considered the crypto event of the year 2022. It is difficult to say otherwise.
Last month, the blockchain recorded a peak in presence on social media. During the month of September, Ethereum saw a 4.02% increase in mentions on the networks. Engagement meanwhile climbed 26.9% over the same period compared to August.
Despite this renewed interest, market sentiment around the asset has not improved. According to the Santiment platform, Ethereum has even seen a decline in its weighted social sentiment over the past two days. As of this writing, this is -0.453. However, for many, it could also suggest that the asset is close to a low point.
Good to know: Weighted social sentiment compares the delta between positive and negative reviews of an asset on networks like Twitter. It is then multiplied by the social volume. It is usually between -3 (extremely negative) and 3 (extremely positive). When prices hit highs, that sentiment wanes. Conversely, a very low-weighted social sentiment generally coincides with a low price.
Volumes remain low!
This argument argues negatively for Ethereum. Like the market as a whole, Ethereum is suffering from investor caution. In recent days, the volume is decreasing. On September 30, the volume of ETH traded was over $13 billion. Yesterday, it was just over 6 billion. An element that some will largely justify by the weekend effect and the low transaction volumes associated.
But if trading volumes decline, so does development activity. At the time of writing, the ETH token is trading on the markets for $1,290.91. Down 1.46% over the past 24 hours. If the volumes are lower, it may also be related to the fact that Ethereum whales have been accumulating massively for weeks. As the WhaleStats platform shows, the 5,000 largest ETH wallets have strengthened their positions in the asset.
Either way, it looks like Ethereum is sending us the opposite signals. In the weeks or months to come, the asset will remain dependent on two central elements: inflation and the risk of recession. Like the whole crypto market and risky markets.
Note that Ethereum has just received the green light from a telecommunications giant: Deutsche Telekom. The latter has just announced its desire to set up an Ethereum validator.
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