Summary

Despite a decline in price, the Ethereum network is experiencing massive growth

The number of active Ethereum addresses is increasing

The rate at which new addresses are being created is increasing

Twice as many daily transactions are taking place on Ethereum’s network

Ethereum is the second-largest cryptocurrency by sheer market cap. It is also the most known currency following Bitcoin. As a result, Ethereum saw a wild price fluctuation through late 2017 and early 2018, reaching a price of over $1,000.

The current price is ~$145, down 41% in the last month. However, rather than a declining interest in the popular blockchain platform, interest has spiked.

Analyzing the Ethereum Network

Several key indicators help determine sustainable network growth. These factors include the number of active Ethereum addresses, the rate at which new users are joining and the trend of daily transactions on the blockchain.

Active Ethereum Addresses

The number of active Ethereum addresses is a good indicator of the platform’s usage and popularity. Simply put, the greater the number of active addresses, the greater the number of active users.

Active ETH Addresses – Bitinfocharts

The year began with just over 300,000 active addresses and topped at over 500,000 addresses, reaching a yearly high. This is nothing to scoff at as the number of active addresses has nearly doubled, despite the declining price.

Although some may claim that an increase in active addresses is attributable to Ethereums’ declining price due to many liquidating their dormant wallets. This claim is partially true as a fraction of the additional active wallets accounts for this, however, unique address growth is still up 75% from Quarter I 2019 and thus is less correlated to the recent dump than to organic network growth.

Unique Ethereum Adresses

The network has seen a large increase in unique addresses and more importantly, a larger increase in the number of new addresses created each day. This means the rate at which new users are joining the network is increasing exponentially. A rapid increase in new users signals greater interest in the underlying technology, especially as the price is declining.

Transactions

Daily transaction count is also a very good indicator of network growth. The rule of thumb: an increase in daily transactions over a sustained period of time means network growth.

Daily transaction count has doubled since the beginning of this year and up 50% since the same time last year. An influx in daily transactions is attributable to not just an increase in transfers but an increase in the smart contract platform’s users.

Bottom Line

The Ethereum network is experiencing massive growth which would be unsurprising in a bull market, but very significant in a bear market. As a result, we can assume that the growth is primarily driven by the underlying blockchain technology.

We believe that the next cryptocurrency bull run will be based on technology and adoption rather than pure speculation. Ethereum’s massive growth is a good indicator that users are buying into blockchain through adoption, rather than speculation.

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