The recent decline in Ethereum wallet addresses may be linked to the launch of spot Ether ETFs in the United States.
Interest in Ethereum has markedly diminished this year, even with the eagerly awaited approval of spot Ether exchange-traded funds (ETFs). Recent figures show that new Ethereum wallet addresses have reached their lowest point in 2024, signaling a reduction in enthusiasm for the digital asset.
Currently, the seven-day moving average of new Ethereum wallets stands at 82.15K, the lowest since December 2023. Additionally, Ethereum Network faces further strain with a decrease in active addresses in August.
According to bitinfocharts, active Ethereum addresses have dropped to 564.8k, a decrease from 931.8k in June. This decline has nearly brought the number of active addresses to a six-month low.
Growth on Other Networks
In contrast, Solana, often dubbed the “Ethereum Killer,” has experienced a rise in new addresses. Its decentralized exchange (DEX) ecosystem is rapidly catching up with Ethereum, bolstered by the growing popularity of meme coins.
Similarly, the Bitcoin network has seen an increase in new addresses despite market volatility. However, this uptick hasn’t translated into greater on-chain activity, suggesting that these new wallets are not enhancing overall network utility.
Reasons Behind the Decline
The launch of spot Ether ETFs in the U.S. might explain the drop in Ethereum addresses, as some investors may now prefer these funds over direct cryptocurrency purchases.
Furthermore, the March 2024 Dencun upgrade, which aimed to reduce Ethereum’s total supply, failed to generate the anticipated price boost. This has likely further dampened investor enthusiasm.
Ethereum’s value is under significant pressure, trading around $2,240, a drop of over 23% in just 24 hours. In the past week, Ethereum has lost more than 33% of its value, with its market cap falling to $268.8 billion.
From its all-time high of $4,891 in November 2021, Ethereum has now declined by 55%.
This ongoing decrease in demand is also evident in the spot Ether ETFs, which have experienced a cumulative outflow of $510 million since their inception. On Friday alone, these ETFs saw a combined outflow of $54.27 million.
Despite this short-term decline, experts believe these ETFs will eventually foster positive growth. Analysts forecast that Ether’s price could rise to $6,500 later this year.
Meanwhile, the broader cryptocurrency market is also grappling with price volatility. Bitcoin is trading around $52,000, having fallen more than 13% in the past 24 hours.
