{"id":51056,"date":"2022-06-15T01:10:16","date_gmt":"2022-06-15T01:10:16","guid":{"rendered":"https:\/\/harchi90.com\/ethereum-price-falls-below-1-1k-and-data-suggests-the-bottom-is-still-a-ways-away\/"},"modified":"2022-06-15T01:10:16","modified_gmt":"2022-06-15T01:10:16","slug":"ethereum-price-falls-below-1-1k-and-data-suggests-the-bottom-is-still-a-ways-away","status":"publish","type":"post","link":"https:\/\/harchi90.com\/ethereum-price-falls-below-1-1k-and-data-suggests-the-bottom-is-still-a-ways-away\/","title":{"rendered":"Ethereum price falls below $ 1.1K and data suggests the bottom is still a ways away"},"content":{"rendered":"
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Ether (ETH) price nosedived below $ 1,100 in the early hours of June 14 to prices not seen since January 2021. The downside move marks a 78% correction since the $ 4,870 all-time high on Nov. 10, 2021.<\/p>\n

More importantly, Ether has underperformed Bitcoin (BTC) by 33% between May 10 and June 14, 2022, and the last time a similar event happened was mid-2021.<\/p>\n

ETH \/ BTC price at Binance, 2021. Source: TradingView<\/em><\/figcaption><\/figure>\n

Even though Bitcoin oscillated in a narrow range two weeks before the 0.082 ETH \/ BTC peak, this period marked the “DeFi summer” peak when Ethereum’s total value locked (TVL) catapulted to $ 93 billion from $ 42 billion two months earlier.<\/p>\n

What’s behind Ether’s 2021 underperformance?<\/h2>\n

Before jumping to conclusions, a broader set of data is needed to understand what led to the 31% correction in the ETH \/ BTC price in 2021. Looking at the number of active addresses is a good place to start.<\/p>\n

Ethereum network daily active addresses, 7-day average. Source: CoinMetrics<\/em><\/figcaption><\/figure>\n

Data shows steady growth in active addresses, which increased from 595,620 in mid-March to 857,520 in mid-May. So, not only did the TVL growth take investors by surprise, but so did the number of users.<\/p>\n

The 31% Ether underperformance versus Bitcoin back in June 2021 reflected a cool-off period after unprecedented growth in the Ethereum ecosystem. The consequence for Ether’s price was devastating and a 56% correction followed that “DeFi summer.”<\/p>\n

Ether \/ USD price at Coinbase, 2021. Source: TradingView<\/em><\/figcaption><\/figure>\n

One must compare recent data to understand whether Ether is heading to a similar outcome. In that sense, those who waited for the 31% miss versus Bitcoin’s price bought the altcoin at a cycle low near $ 1,800 on June 27, 2021 and the price increased 83% in 50 days.<\/p>\n

Is Ether flashing a buy signal right now?<\/h2>\n

This time, there is no DeFi Summer and before this year’s 33% negative performance versus Bitcoin, the active address indicator was already slightly bearish.<\/p>\n

Ethereum network daily active addresses, 7-day average. Source: CoinMetrics<\/em><\/figcaption><\/figure>\n

By May 10, 2022, Ethereum had 563,160 active addresses, in the lower range from the past couple of months. This is the exact opposite of the mid-2021 movement that occurred as Ether price accelerated its losses in BTC terms.<\/p>\n

One might still think that despite a relatively flat number of users, the Ethereum network had been growing by presenting a higher TVL.<\/p>\n

Ethereum network total value locked, USD. Source: Defillama<\/em><\/figcaption><\/figure>\n

Data shows that on May 10, 2022, the Ethereum network TVL held $ 87 billion in deposits, down from $ 102 billion a month prior. Therefore, there is no correlation between the mid-2021 cool-off after “DeFi summer” and the current 33% Ether price downturn versus BTC.<\/p>\n

These metrics show no evidence of similarity between the two periods, but $ 1,200 might as well be a cycle low, and this will depend on other factors apart from the network’s use. <\/p>\n

Considering how weak active addresses and TVL data were before the recent price correction, investors should be extra careful when trying to predict a market bottom.<\/p>\n

The views and opinions expressed here are solely those of the <\/em>author<\/em><\/a> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n