 ▲ Ethereum (ETH) |
Despite explosive growth in on-chain activity on the Ethereum (ETH) network, including record-breaking active users and smart contract calls, its price has paradoxically been cut in half. Unlike in the past, network growth is no longer directly translating into price appreciation, while massive capital outflows from the ecosystem are fueling market concerns.
According to investment media outlet FXStreet on March 12 (local time), citing a Tuesday report from on-chain data analytics platform CryptoQuant, Ethereum network activity has reached new milestones in recent months. In February, the number of daily active Ethereum addresses hit an all-time high of approximately 2 million—double the peak seen during the 2021 bull market—while daily smart contract calls surged past 40 million, far exceeding levels recorded in 2018 and 2021.
Despite strong growth across key network metrics, Ethereum, the second-largest cryptocurrency by market capitalization, has lost more than 50% of its value over the past four months. Historically, increases in smart contract activity and active addresses moved in tandem with Ethereum’s price gains. However, this correlation has recently broken down, suggesting that growth at the application layer no longer directly drives asset value appreciation.
CryptoQuant analysts noted that in the current market cycle, capital flows—rather than network utility—are the primary factor determining Ethereum’s price. Ethereum is facing strong selling pressure, with more inflows to exchanges compared to market leader Bitcoin (BTC). Additionally, Ethereum’s one-year change in realized market capitalization, which measures net capital inflows and outflows, has turned negative. This clearly indicates that despite record network activity, actual capital is leaving Ethereum.
In the derivatives market, $43.3 million in liquidations occurred over the past 24 hours, according to CoinGlass, with $24.6 million of that coming from short position liquidations. Currently trading around $2,055, Ethereum remains above its 20-day exponential moving average, which has flattened near $2,024, reflecting a cautiously bullish-neutral stance. However, with the 50-day exponential moving average positioned near $2,219, the broader trend still suggests a recovery attempt within a medium-term downtrend.
The Relative Strength Index has stabilized just below 50, while the Stochastic Oscillator remains in the mid-range, indicating easing downside pressure rather than a strong directional trend. The first short-term resistance level stands at $2,108; a daily close above this level could open the door for gains toward $2,389 and $2,746. On the downside, initial support lies at $1,741. A breakdown below this level could expose Ethereum to further declines toward $1,524 and $1,405, making the defense of key moving averages critical in determining the next market direction.
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