Bitcoin

These 3 top on-chain metrics suggest that Ethereum price is on a bull cycle similar to 2017

The price of Ether (ETH) is currently between $ 440 and $ 470, similar to December 2017. On that occasion, the scenario was incredibly upbeat and the altcoin quickly rose to $ 1,400.

Fast forward to 2020, and some investors believe a similar outcome could occur as some key on-chain and technical indicators reflect the same values ​​seen during the 2017 bull run.

On December 10, 2017, the price of Ether was $ 450 and it took only 34 days to hit its all-time high. Before this price explosion, the altcoin traded sideways for more than two weeks. When something like that happens On-chain metrics and historical data suggest that this could happen in the next ten days.

Ether in December 2017 (left) against Ethereum in November 2020 (right). Source: TradingView
These 3 top on-chain metrics suggest that Ethereum price is on a bull cycle similar to 2017
These 3 top on-chain metrics suggest that Ethereum price is on a bull cycle similar to 2017

See how recent price movements have raised investor hopes that the next bull cycle in the cryptocurrency market will be similar to late 2017. While price is an important metric, it does not include details about network usage and volume.

To assess the size and number of daily transactions, Coinmetrics provides data after transactions and transfers.

Average daily transactions of Ether (left) compared to the price of ETH. Source: Digital Assets Data

The graphic above shows $ 1.9 billion from recent wire transfers and transactions, up 46% from the previous month. Although the rise in the price of ether certainly helped, the same effect occurred in late 2017.

Daily average of fictitious transactions and transfers. Source: CoinMetrics

The daily average of fictitious transactions and transfers on the Ethereum network was $ 830 million in November 2017. All of that changed towards the end of the month when the indicator crossed the $ 2 billion mark. This indicator is closely related to the current scenario.

To better measure network activity, We also need to analyze the number of active addresses on a daily basis. While this should not be construed as the number of active users, provides a reliable indicator for measuring network usage.

Daily active ether addresses (right) and ether price (left). Source: Digital Assets Data

The data for November 2020 seems to repeat the high of the previous month with 550,000 active addresses daily. On this occasion, the activity appears to be at a much higher level than at the end of 2017.

Of course, you may have to adjust the data to take into account the increasing use of decentralized finance (DeFi) and stablecoins. Performance pools and decentralized exchanges are responsible for tens of thousands of daily transactions with multiple addresses.

Daily active ether addresses. Source: CoinMetrics

As expected, The number of daily active addresses in November 2017 was 200,000, well below the current number. However, by the end of 2017, 500,000 active network addresses could be reached every day.

The on-chain analysis may have been close enough to current levels, but the price movement is highly volume dependent. After all, doing business is not directly related to network usage.

Ether average daily volume. Source: Messari

The current average daily volume of USD 1.3 billion represents an increase of 50% over the previous month. This data is a significant fact as it does not involve a decentralized exchange.

Ether daily transparent volume. Source: Messari

Oddly enough The current ether volume will exceed the level of December 2017. Hence, we can conclude that this is too much of a coincidence to be ignored.

The current daily active addresses, fictitious transactions / transfers and trading volume correspond to the period in late 2017 when Ether was trading near the $ 450 mark.

Because of this, analysts have strong reason to believe that a bull run to $ 1,400 is within reach in the coming weeks.

Will another DeFi mania be enough to generate an influx similar to what we saw in the 2017 ICO era? Or will it be institutional investors and high net worth investors making a big 300% rally?

Remember as the saying goes: “History doesn’t repeat itself, but it often rhymes.”

The views and opinions expressed here are solely those of darer and do not necessarily reflect the views of Cointelegraph. Every investment and business move is associated with risks. You must do your own research when making a decision.

Similar Posts