With Bitcoin stealing most of the market attention, the top altcoin, Ethereum has been out of the larger picture since Q4 took off. On the pricing side, the growth of BTC has increased market anticipation while Ethereum has taken a sloppy approach with its development side looking rather dynamic.
Demand for Ethereum makes a comeback
After a massive surge in Layer-2 protocols towards the end of Q3, demand for Ethereum blockspace seemed to have rebounded as the last quarter of the year began. Notably, Ethereum’s transaction fees topped $ 1 billion in September with an average transaction fee of $ 28.
After EIP-1559 went live, a staggering 55% net reduction in ETH issuance was noted with over 474K ETH ($1.7B) being burned. This in turn gave way to the narrative of the supply shock which was bullish for ETH’s long-term trajectory.
However, as noted by analyst SpencerNoon, Ethereum sustained high fees hampered the user experience and served as a tailwind for more user adoption of cheaper L2s and alternative L1s.
This could be one of the reasons that active addresses on Ethereum were close to 577K, a drop of almost 25% from the highs in May. Nonetheless, a booming NFT market alongside Defi growth over the last quarter indirectly enabled a more robust Ethereum ecosystem.
Healthy HODLing behavior
Ethereum HODL waves help track the activity of the current ETH supply based on the last movement on the chain. In particular, 76% of the supply has not moved for more than six months and around 46% of the supply is in age groups over one year.
Some of the major factors impacting HODL waves include ETH’s dominance in Defi, Ethereum staking, and CEX ETH reserves in cold storage. That being said, one worrying factor was that $ 306 million worth of ETH was deposited into exchanges, compared to $ 750 million withdrawn in the past week.
Looking at exchange inflows picking up it seemed like there might be a rise in sell-side pressure to be absorbed around price resistance level.
A development that looks dynamic
Data scientist Daren Matsuoka declared that the Ethereum developer community “is more vibrant than ever”. In fact, more developers have entered the Ethereum ecosystem so far this year than the previous two years combined.
The growth of Ethereum developer activity has been analyzed by examining GitHub stars on key developer repositories such as web3js, truffle, solidity, hardhat, ethersjs, OpenZeppelin contracts, web3py and scaffold-eth, over the course of the year. time.
Notably, there were now over 39K Github accounts that have starred at least one of the key repositories. With its development activity on the rise and the rebound in demand for the Ethereum network, the future of ETH looked rather bright.
