One possible explanation for the drop in Ethereum addresses could be the recent launch of spot Ether ETFs in the United States.
Interest in Ethereum has taken a notable downturn this year, despite the much-anticipated approval of spot Ether exchange-traded funds (ETFs). Recent data reveals that the creation of new Ethereum wallet addresses has hit its lowest point in 2024, indicating a cooling interest in the digital asset.
As of now, the seven-day moving average of new Ethereum wallets is at 82.15K, which is at the lowest level since December 2023. Additionally, Ethereum Network’s challenges are further compounded by the drop in active addresses in August.
Data from bitinfocharts reveals that the number of active Ethereum addresses has fallen to 564.8k, down from 931.8k in June. This drop has almost sent the Ethereum active addresses to a six-month low.
Uptrend on Other Networks
In contrast, Ethereum’s rival, Solana, often called the “Ethereum Killer”, has recorded a surge in new addresses. Its decentralized exchange (DEX) ecosystem is rapidly closing the gap with Ethereum, especially with the ongoing popularity of meme coins.
Meanwhile, the Bitcoin network has also observed an increase in new addresses despite the current market volatility. Nevertheless, this surge hasn’t increased the on-chain engagement, indicating that these fresh wallets aren’t enhancing overall network utility.
Why This Drop?
One possible explanation for the drop in Ethereum addresses could be the recent launch of spot Ether ETFs in the United States. It appears some investors are now shifting to these funds instead of buying the cryptocurrency directly.
Additionally, the March 2024 Dencun upgrade, which reduced the total supply of Ethereum, did not result in the expected price surge. This has likely dampened investor enthusiasm further.
Ethereum’s value has been under significant pressure. Currently trading around $2,240, ETH has dropped by over 23% in the past 24 hours alone, startling investors and traders alike. Over the past week, Ethereum has lost more than 33% of its value. The cryptocurrency’s market cap has also seen a free fall, now standing at $268.8 billion.
From its all-time high of $4,891 achieved in November 2021, Ethereum is now down by 55%.
This consistent reduction in demand is also reflected in the inflows to spot Ether ETFs. These products have seen a cumulative outflow of $510 million since their launch. On Friday, they faced a combined outflow of $54.27 million.
However, despite this short-term drop in demand, experts suggest that these ETFs will eventually lead to positive growth. Analysts predict that Ether could see its price surge to $6,500 later this year.
Meanwhile, the broader cryptocurrency market is also facing price volatility. Bitcoin is currently trading at the $52,000 level, down by over 13% in the past 24 hours.
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