ETH price loses ground, but network metrics say DeFi season not over yet

Tuesday 22 September 2020, 1:40 AM AEST - 1 month ago

Ether has dropped around 30% from its 2020 high of $482 on Sept. 1 to $340 in five days. The drop in the price of Ether (ETH) and Bitcoin (BTC) was largely due to the rising dollar, which has stopped Bitcoins bull run in its tracks. Ether is still sitting at around $340, failing to recover its price ranges of August.

As the price of Ether dropped significantly from the start of the month, several fundamental factors on the Ethereum network itself have changed. These include the movements and positions of key figures in the ecosystem, such as traders, whales, miners and DApp users, as well as the activity on the network, especially when it comes to DeFi and stablecoins. In addition, ECR-20 tokens have now overtaken Ethereums market capitalization.

Given that DeFi tokens form the backbone of the Ethereum network, they will largely influence the upcoming price movements of Ether itself. Understanding Ethers movements will give traders a better idea of where money is going, and understanding such activity within the network will provide a sense of how popular the actual network is compared to trading.

Hodlers and traders

With Ether losing almost 30% of its value in five days at the start of the month, the dynamics of whos holding, using and trading the cryptocurrency have changed. According to data from CryptoCompare, a market data resource, the number of active addresses has been dropping. James Li, a research analyst at CryptoCompare, told Cointelegraph:

The active address is related to the number of users, and the drop in active addresses may suggest that some users were put off by the price crash and even that DeFi may be beginning to cool off. However, it can also be due to users holding and not moving their holdings after swapping to DeFi tokens.

As for traders, CryptoQuant, an on-chain analytics firm, saw a huge uptick following the market crash. According to Ki Young Ju, the CEO of CryptoQuant, Ether inflows into exchanges hit a six-month high on Sept. 1 and decreased shortly after. More recently, inflows have started to increase again since Sept. 14, which ...

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