Early signs that Bitcoin’s bull market was brewing was tipped off by a slow and steady increase in BTC address activity, and now that trend is taking place across ETH wallets. Wallet activity has now reached a level not seen since this summer’s DeFi surge. But what exactly does this mean for the second-place cryptocurrency?
Ethereum Address Activity Returns To 2020 Highs, Ditches DeFi Bandwagon
Bitcoin is rather straightforward compared to others, as adoption can be measured by BTC wallet activity and blockchain transactional behavior. When more users are holding BTC and moving it off of exchanges and not to them, then the price of the digitally scarce asset goes up exponentially until those users are ready to sell again.
This fundamental formula of forecasting adoption – and potentially price – is slightly different for Ethereum. Wallet activity does matter, but due to the asset’s smart contracts, and decentralized applications like DeFi, Dapp usage, total value locked in applications, and other metrics also matter a great deal in gauging the altcoin’s long-term health.
Active ETH addressed have revisited the DeFi summer peak in August | Source: glassnode.com
When these DeFi related metrics first exploded over the summer months, active ETH wallets reached a two-year high. Now, even without the supporting DeFi bandwagon booming, those active addresses have achieved a similar milestone.
Surging activity is great for adoption, but what does this actually mean for Ethereum price?
Ethereum is currently trading at over $600 and is more than 50% away from its all-time high of $1,400 set at the start of 2018. The altcoin market topped out nearly two-to-four weeks after Bitcoin did, as profit flowed from the top-ranked cryptocurrency into altcoins and then finally into cash.
Could this uptick in activity cause Ethereum to catch up to Bitcoin finally? | Source: ETHUSD on TradingView.com
A boost in wallet activity last month even helped the crypto market’s biggest laggard, XRP, skyrocket as part of a 200% rally. If Ethereum can pull off a similar feat, a more than 200% rally is just what the altcoin needs to help propel it toward former peak prices, and potentially set a new record just like Bitcoin has.
Featured image from Deposit Photos, Charts from TradingView.com