Although the price of ETH has halted at $1,100, numerous data signs show that the altcoin’s sell-off is far from over.
In the early hours of June 14, the price of Ether (ETH) fell below $1,100, a level not observed since January 2021. Since the all-time high of $4,870 on Nov. 10, 2021, the downward move represents a 78 percent correction.
More significantly, between May 10 and June 14, 2022, Ether underperformed Bitcoin (BTC) by 33%; the last time this occurred was in mid-2021.
Even though Bitcoin oscillated in a small range two weeks before the 0.082 ETH/BTC peak, this was the “DeFi Summer” peak, when the Ethereum network’s total value locked (TVL) surged to $93 billion from $42 billion two months ago.
What’s Behind Ether’s 2021 Underperformance?
To understand what caused the 31 percent decrease in the ETH/BTC price in 2021, a more extensive set of statistics is required before jumping to conclusions. A smart thing, to begin with, is to look at the number of active addresses.
According to the data, active addresses rose gradually from 595,620 in mid-March to 857,520 in mid-May. As a consequence, not only did the TVL growth surprise investors but so did the number of users.
In June 2021, Ether underperformed Bitcoin by 31%, indicating a cooling-off period following the Ethereum ecosystem’s extraordinary rise. The price of Ether was decimated as a result, and the following DeFi Summer saw a 56 percent correction.
To evaluate whether Ether is moving in the identical direction, recent data must be examined. In this respect, people who bought the altcoin at a cycle low near $1,800 on June 27, 2021, waited for the 31 percent miss vs Bitcoin’s price, and the price climbed 83 percent in 50 days.
Is Ether Currently Displaying A Buy Signal?
There will be no DeFi Summer this year, and the active address indicator was already moderately gloomy before this year’s 33% loss versus Bitcoin.
Ethereum had 563,160 active addresses on May 10, 2022, a drop from the prior few months. This is the polar opposite of the mid-2021 action when Ether’s price decreased in BTC terms.
Although a relatively flat number of users, one may believe that the Ethereum network was expanding by showing a greater TVL.
According to research, the Ethereum network TVL had $87 billion in deposits on May 10, 2022, decreasing from $102 billion the month before. As a result, there is no connection between the mid-2021 cool-down following DeFi Summer and the current Ether price decline of 33% versus BTC.
These measurements reveal little consistency between the two times, but $1,200 could be a cycle low, relying on other factors besides network usage.
Given how shaky active addresses and TVL statistics were before the recent price fall, investors should proceed with caution when seeking to forecast a market bottom.