ETH has a solid use case for the upside in 2022.
The year 2021 is sure to be a revolution for the crypto space, especially as the decentralized finance sector as well as the irreplaceable token boom are gradually being accepted by the mainstream market. However, the good days don’t last forever. Many fear that this year may not bring equivalent returns for investors due to obvious signs of decline.
According to IntoTheBlock analyst Lucas Outumuro, Ethereum’s utility could be a lifesaver in this case. In report In his recent comments, he emphasized that the largest smart contract platform’s transaction volume is increasingly losing correlation with ETH price action. Therefore, the network and its native token are now used regardless of where the price moves.
This is in contrast to the crypto crash of 2018, when the number of transactions collapsed along with the price.
Daily ETH transaction count (green) | Source: IntoTheBlock
The steady flow of transactions is likely due to the DeFi summer of 2020 along with the Web3 and NFT platforms that have been very popular over the last year. In fact, many platforms are built on Layer 1 of Ethereum.
Number of active ETH addresses | Source: YCharts
The number of daily active addresses on the Ethereum network also showed a similar trend. This indicator fell sharply in early 2018 after the price crash. However, it is currently stable, despite the fall in prices in May 2021.
Additionally, the number of ETH addresses with non-zero balances recently hit an all-time high of 73,104,412. This could indicate hopeful investors are accumulating.
Number of ETH addresses with balances not equal to 0 | The source: glass node
Another factor in Ethereum’s favor over the past year was EIP-1559’s implementation of a fee burning mechanism. Since then, the network has burned more than 1.55 million ETH worth nearly $4.8 billion to turn the largest altcoin into a deflationary digital asset. The goal was somewhat achieved this week after burning over 20,000 ETH in just one day statistical – reach new highs.
In addition, the inflation rate is also lower than Bitcoin. Traditionally, BTC has been viewed as an inflation hedge due to its limited supply.
Inflation rate of ETH and BTC | The source: Crypto-Gucci.eth
Outumuro argued in the report that the renewed or ongoing NFT craze also increases Ethereum’s ability to grow to higher levels. While the Ethereum-based OpenSea NFT marketplace continuously executes millions of dollars worth of transactions each week, the emergence of new platforms like LookRare that have taken the market by storm is now adding to the frenzy.
The source: Red yakir
In fact, JP Morgan has comment in a recent report:
“With NFT being the fastest growing universe in the crypto ecosystem, Ethereum’s market share in the NFT space could be more important than its share in the DeFi space to drive future valuations.”
The bullish trend notwithstanding, Ethereum’s ongoing congestion issues have limited its success. Outumuro noted in the report that the slight decline in the network’s transaction count over the past year could be due to the emergence of Layer 2 scaling solutions, such as Arbitrum and Optimism requiring significantly lower fees than their Ethereum-powered counterparts.
Average Transaction Fee | The source: That martini guy
However, this trend could also indicate a weakening of Ethereum’s dominance as competing blockchains emerge as alternatives. Cardano’s daily transaction count is now on par with Ethereum’s and even briefly surpassed it this week. Add to that the appearance of Fantom, which could also prove to be a formidable adversary.
https://twitter.com/milesdeutscher/status/1483285565848309771?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener“Fantom’s daily transaction count is just 100,000 behind Ethereum and catching up fast. Meanwhile, the price of FTM is still 51 times lower than ETH ($150). On-chain data doesn’t lie.”
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Explore the best new meme coins with 1000X potential. Learn how BTFD Coin leads with…
BlockDAG crosses $170.5M in presale success with BDAG250 bonus and Whitepaper V3 launch! Solana grows…
Discover why Qubetics, Toncoin, and XRP are the best coins to invest in right now.…
Over the years, meme coins have evolved from inside jokes into serious investment opportunities.
Discover BlockDAG's five-tier bonus program's closing phases that enhance buyer holdings. Gain insights on the…
Discover why Qubetics, Solana, and Cardano are redefining the crypto landscape. Learn about milestones, price…
This website uses cookies.