While Ethereum’s price is still struggling to achieve sustained growth, an examination of its on-chain activity has revealed a significant change in the behavior of market participants.

Busy addresses dropped to 327,000 from 483,000 in August

In the Quicktake post on the CryptoQuant platform, a CryptoOnchain market analyst common that there is an increasing shortage of activity on the Ethereum network. Specifically, quantitative data obtained from the Ethereum Busy Addresses metric, observed on a 7-day basic moving average.

Since peaking in August, the Busy Addresses Index has steadily declined from approximately 483,000 to 327,000, the lowest level reached since May of this year. This decline of over 32% suggests that willing participants are increasingly leaving the Ethereum network.

Interestingly, the mentioned deterioration is not an independent phenomenon. Around the same period that energetic addresses were exploring the south side of the charts, Ethereum’s price also took a bearish turn. During this period, the Ether token lost its valuation of $4,800 and began to decline to its current price of approximately $3,100.

According to the analyst, this sturdy correlation between Ethereum’s falling valuation and degenerating network usage points to something clear – that the recent price drop is likely the result of reduced demand for the network. This further demonstrates that market participants are moving beyond speculation and are instead taking a broader view of the Ethereum blockchain.

Ethereum market Perspectives

On a more positive note, CryptoOnchain explained how robust bull cycles differ from the current market cycle. Typically, rising prices are not taken for granted as they often indicate a robust upward cycle.

The expansion of the apply of cryptocurrency networks also lends credence – enough to serve as confirmation – to suspicions of structural changes in bull phases. This theory is true based on various historical events.

So the market would not qualify as bullish enough if Ethereum’s price increases without a parallel augment in on-chain activity. Therefore, for a compelling price reversal to persist, there must be a significant and sustained augment in the number of energetic addresses.

This would mean a return of demand in the supply chain and would further augment expectations for imminent momentum. Until these conditions are met simultaneously, the Ethereum market remains in a state of extreme caution, where prices can move in either direction, and the main factor is the influx of network users.

At press time, the Ether token is trading at around $3,106, which does not reflect any significant movement since the last day.

Featured image from iStock, chart from TradingView