While ether, the native token of Ethereum’s blockchain, remains on an upward trajectory, metrics like active addresses, trading volumes have decoupled from the rising price. According to blockchain analytics firm Santiment, these negative divergences indicate scope for a price pullback.
Ether’s daily (24-hour) active addresses, a proxy for user participation, peaked above 670,000 at the end of October and has been declining ever since, diverging from the cryptocurrency’s rising price.
Network usage affects the demand for cryptocurrency and can influence its price. An uptick in the number of active addresses along with a price increase is said to confirm an upward trend. So, analysts often question the sustainability of price gains whenever the price rally is accompanied by a drop in active user participation on the network.
