The running theme in recent months is that Ethereum has never been better positioned for a price rally, with fundamental metrics reaching and crossing over into new all time highs.
Yet despite Ethereum’s fundamentals having never been better, the price of ETH has traded sideways in recent weeks. This articles takes a step back and examines the broader trends that are priming ETH for what many expect to be an impending bull run.
1. Ethereum Outpaces Early Internet Growth
In less than 5 years, Ethereum has reached 100 million total addresses created. While it’s not necessarily the best indicator for measuring tangible activity (it’s trivial for a single user to create multiple addresses), this is a major milestone for the network as a whole and strong indicator of underlying activity.
Network growth is also outpacing that of early Internet adoption, which, according to data from Internet World Stats, saw 16 million total internet users in 6 years.
When drilling into this data further and accounting only for Ethereum addresses with a non-zero balance, growth continues to show the same rapid upward trend to 40 million while the price of ETH hovers well below its all time highs.
And this growth has happened in only 5 years.
2. Daily Fees Surpass Bitcoin
One of the most touted metrics when looking at blockchain networks is the amount of fees paid to miners. It’s generally regarded as a vital metric for determining the network’s demand as a settlement layer for value transfer. While Bitcoin has dominated this metric since its genesis, daily fees paid on Ethereum recently shot past the incumbent, reaching just shy of $500K, compared to Bitcoin’s $308K in the same day
While this “flippening” has happened before, the scale between the two networks has never been so large or spanned consecutive days. This could well signal the beginning of a more frequent trend.
3. Daily Gas Used Reaches ATHs
As alluded to above, the demand for blockspace and the fees paid for it is a critical metric when understanding the network’s effectiveness as a settlement layer. With daily gas consumed reaching all-time highs, it’s another strong signal that speaks to ETH’s value as an asset. Anytime a token is transferred, a MakerDAO vault is created, a Uniswap trade is made, or a DAO votes on a proposal, it requires some ETH to fuel the network to execute those transactions.
Gas used reached a new high of 60M gas (roughly ~426,000 ETH) consumed by the network in a single day. To this end, the new ATH for gas consumption highlights the growing demand to use Ethereum for economic activity (and more).
4. USDTe Transactions Near Parity with Bitcoin
If you’ve been paying attention to the Ethereum ecosystem in recent months, you’re likely well aware of the rise of crypto dollars (also known as stablecoins) on Ethereum. As it stands today, stablecoins have amassed roughly $10 billion in value on Ethereum alone, or around 37% of Ethereum’s current market cap.
This trend doesn’t seem to be slowing down as we’re now seeing USDT on Ethereum (USDTe) reach parity with Bitcoin’s transaction count. While ETH surpassing Bitcoin’s transaction count is old news (largely due to Ethereum being able to execute more complex transactions), a single tokenized asset on Ethereum is competing with the largest asset by market cap in daily transactions.
Although this metric has no direct bearing on the price of ETH, it shows a fundamentally strong value proposition for Ethereum as a settlement layer.
Going further, the possible introduction of EIP-1559 (an Ethereum gas burning mechanism) could have a significant impact on the supply side of Ethereum, creating a more direct relationship between transaction activity and Ether’s price.
5. Ethereum’s DeFi Crosses $1B TVL for Second Time This Year
As highlighted earlier this week, Ethereum’s DeFi has reached $1 billion in total value locked (TVL) for the second time this year. While this milestone was reached with less ETH locked in, ETH’s trust-minimized nature remains critical to the long term success of open finance.
DeFi protocols are presenting some intriguing opportunities too. MakerDAO currently offers 0% leverage on ETH collateral, a catalyst that may drive the demand for ETH upwards as Maker slowly regains the trust of the DeFi community in lieu of Black Thursday and the global pandemic.
While price movements can drive onlookers stir-crazy, some solace can be found by stepping back and analysing the broader trends occurring within Ethereum. The further these metrics move from Ether’s price, the more pressure placed on a correction that accounts for the blockchain’s fundamental value.
With these metrics showing absolutely no sign of slowing down, the flat-lining price of Ethereum is blockchain’s elephant in the room.