Ethereum Holds Its Own as Bitcoin Surges in Q4

While investors’ attention is focused on Bitcoin, ETH appears to have stayed open since entering the fourth quarter. On the price front, BTC’s growth has raised market expectations, while ETH has shown less weakness compared to its rather brisk looking development side.

Demand for Ethereum Income

After the massive surge in Layer 2 protocols at the end of the third quarter, the demand for Ethereum block space appears to have recovered at the beginning of the fourth quarter. In particular, Ethereum’s transaction fees topped $ 1 billion in September with an average fee of $ 28.

After EIP-1559 went live, there was a net decrease of 55% on over 474,000 Ethers burned ($ 1.7 billion). This should create the story of a supply shock that is bullish on Ether’s long-term development.

Transaction fees in the Ethereum network | Source: SpencerNoon

However, as analyst SpencerNoon noted, the fact that Ethereum maintains high fees hampers the user experience and is a godsend for many users to adopt Layer-2 to replace Layer-1 with a higher level of efficiency.

This could be one reason the active addresses on Ethereum have dropped to just 577,000, almost 25% fewer since the high in May. However, an NFT market is booming along with DeFi growth. In the third quarter, it indirectly enabled a stronger Ethereum ecosystem.

Healthy holding behavior

Hold waves help track how actively the current ether supply is based on the last movement of the on-chain. It is noteworthy that 76% of the offer has not been moved for more than six months and about 46% of the offer is kept for more than a year.

The holding wave of the ether | Source: Glassnode

Some of the key factors influencing the holding wave are the dominance of Ether in DeFi, the staking of Ethereum, and the cold storage reserves of CEX. One worrying factor is that $ 306 million worth of ethers has deposited into exchanges, compared to $ 750 million withdrawn the previous week.

Looking at the increased flow of ether into the exchange, it appears that selling pressure is building around price resistance.

Ethereum network is thriving

Daren Matsuoka, data scientist to say The Ethereum developer community is “livelier than ever”. In fact, the number of developers involved in the Ethereum ecosystem so far this year was the same as two years ago combined.

Source: Daren Matsuoka

The evolution of Ethereum’s developer activity is analyzed by looking at GitHub stars in major developer repositories such as web3js, truffle, solidity, hardhat, ethersjs, OpenZeppelin contract, web3py and scaffold-eth at the time.

Notably, there are now more than 39,000 starred Github accounts from at least one of the major repositories. With its increasing development activity and the recovery in demand for the Ethereum network, the future of Ether looks pretty bright.

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