• 26 May, 2024
News

Ethereum Network Sees Decline in Activity as Whales Accumulate

In the past week, Ethereum has faced a noticeable downturn in both price and network activity. Ethereum’s median gas fees dropped to a mere 12.5 gwei, the lowest this year, with current rates even lower at 8 gwei, as per data from Dune Analytics. Although this decline in cost is beneficial for users at first glance, it actually signals a concerning drop in demand for Ethereum transactions.

Median Gas Price: Dune Analytics

As users begin to favor other blockchains, such as Solana and Base, the implications for Ethereum could be substantial. Besides the lower fees, there’s a notable reduction in the use of decentralized applications (dApps), which could further erode the platform’s ecosystem. Moreover, the decrease in smart contract creation on Ethereum highlights a slowing in both developer activity and innovation within the network. This trend may lead to diminished user engagement and lower overall adoption rates.

Number of Smart Contracts Deployed: Dune Analytics

Additionally, the reduced deployment of smart contracts likely contributes to lower transaction volumes and, consequently, decreased network activity. This reduction could negatively impact Ethereum’s transaction fees and revenue, further complicating the network’s challenges.

However, it’s not all downward trends for Ethereum. Data from Santiment shows a rise in the percentage of large Ethereum addresses. This increase in whale activity, while potentially positive in driving up Ethereum’s price, also brings the risk of heightened market manipulation and volatility. These large holders can significantly influence Ethereum’s price movements through their trading activities.

Source: Santiment

Moreover, the total number of addresses holding Ethereum has also grown, indicating that not only whales but also retail investors are taking an interest in the cryptocurrency. Despite this, Ethereum’s transaction velocity has decreased, showing that the frequency of Ethereum trades has significantly dropped. This slowdown could pose further challenges to the cryptocurrency’s price stability in the future.

As of press time, Ethereum is trading at $3,050 as the broad market suffers bearish pressure. ETH has lost over 5% in the past 24 hours as the price failed to hold above the $3,250 level. Over the past week, ETH has lost 15%, while the monthly chart displays a loss of 13%. Ethereum’s market capitalization has decreased to $366 billion, while the trading volume has a value of $21 billion.

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