Ethereum activity drops 40%

Ethereum's (CRYPTO:ETH) network activity has hit yearly lows, reflecting a significant decline in user engagement and on-chain transactions.

This downturn is highlighted by a drop in daily active addresses and new wallet creations, which have reached their lowest levels of the year.

On Sunday, the number of daily active addresses fell to a year-to-date low of 361,078, according to Glassnode, signaling weakened demand for the Ethereum blockchain.

This decline in activity often results in lower transaction fees, reducing the amount of ETH burned and contributing to inflationary pressures.

New wallet creations also plummeted to 86,539, marking the lowest daily count since the beginning of the year.

This decrease in network participation has exacerbated Ethereum's inflationary issues, with the total circulating supply exceeding 120 million ETH.

In the past 30 days, approximately 71,172 ETH, valued above $135 million at current market prices, have been added to the circulating supply.

The lack of demand to absorb this growing supply has increased downward pressure on Ethereum's price.

Ethereum's daily active ERC-20 addresses have also seen a significant decline, with a current level of 269,047, down 40.69% from last year.

This trend suggests that investor confidence may wane if network activity does not rebound.

As Ethereum's price nears oversold levels, with the Relative Strength Index (RSI) at 34.70, there are concerns about potential further declines to around $1,758 unless demand increases above $1,924.

Experts note that sustained low activity could lead to reduced adoption and increased price volatility.

In contrast, Ethereum's overall active addresses have shown spikes in recent times, with some metrics reaching their second-highest levels ever, indicating fluctuating interest in the network.

At the time of reporting, the Ethereum (ETH) price was $1,901.81.