Ethereum Sees Significant Drop in Network Activity as Retail Investors Withdraw
Ethereum's active user addresses reach a year-low while prices stabilize. Retail investors appear to be retreating from the market.
Bears have driven the price of Ethereum (ETH) below $2,850 as of Thursday amidst a general market decline. The absence of retail activity has shifted Ethereum into a lower-activity state.
However, similar past instances of low activity have often preceded significant market recoveries.
Retail Participation Declines
CryptoQuant’s recent analysis indicates that Ethereum’s network activity has plummeted to a yearly low, reflecting a significant drop in retail engagement. Active sending addresses have dipped to around 170,000. Historically, this figure suggests that retail traders may have exited the market or are reluctant to engage in transactions.
This downturn typically follows long periods of price volatility, which tends to diminish the short-term confidence of smaller traders. Lower activity levels are often linked to seller exhaustions, where selling pressure eases without fresh demand emerging.
While this situation limits the potential for short-term gains, as retail flows are crucial for driving momentum in early recoveries, it has often marked periods where substantial long-term players quietly accumulate ETH.
CryptoQuant explained that price movements alone won’t confirm a recovery. A true signal would derive from a steady rise in active sending addresses in conjunction with price stabilization, indicating a resurgence in demand and enhanced network activity.
If address activity continues to fall or stagnates, the likelihood of Ethereum slipping into a deeper consolidation or decreased demand phase heightens.
Market Sentiment Remains Pessimistic
Not all analysts predict a recovery for ETH. According to Crypto Analyst Ali Martinez, if Ethereum closes December below $2,930, the market may see a steeper decline. A failure to maintain this essential level could push the altcoin down to $2,000, with a worst-case scenario of $1,100.
Additionally, Ethereum ETFs have seen considerable outflows this week as investors decrease their exposure amid heightened market uncertainty. Nearly $225 million exited these funds on Monday, triggered by renewed volatility in US equities and ambiguous global monetary policies. Data from SoSoValue showed further selling on Tuesday, while Wednesday witnessed a lesser outflow of $22.3 million.
Tags: Ethereum, Ethereum (ETH) Price
