In the last week, 7,728 Ethereum (ETH) tokens valued at over $20 million based on current market rates have entered circulation. This increase has raised the altcoin’s circulating supply to a six-month peak of 120.39 million ETH. If demand does not keep up with this influx of new coins, the rise in circulating supply could apply downward pressure on Ethereum’s price.
This analysis highlights critical price levels that investors should keep an eye on as this situation develops.
Ethereum Faces Reduced Usage
Ethereum’s circulating supply indicates the number of ETH coins that are publicly accessible. It excludes coins that are locked, reserved, or unavailable for trading.
As reported by Ultrasound Money, in the past week, 7,728 ETH coins valued at more than $20 million have been added to circulation. Such an increase in ETH’s circulating supply generally occurs when usage on the Layer 1 (L1) network decreases.
Read more: Ethereum ETF Explained: What It Is and How It Works
On-chain metrics from Artemis validate this trend. Over the past week, the daily unique on-chain interactions on Ethereum have declined by 3%.
As a result of this dip in transactions, Ethereum’s network fees have also declined significantly. The data provider indicates that fees have dropped by 43% during this timeframe.
A drop in daily transactions on Ethereum points to a decrease in network activity and usage. This diminished demand for the network can adversely affect ETH’s price, as seen in recent days.
The 3% decline in ETH’s value over the last 24 hours mirrors the broader market downturn, but the decrease in user activity on the Ethereum network has also contributed, as it directly influences demand for this leading altcoin.
ETH Price Outlook: The Importance of Network Activity Improvement
Currently, Ethereum is priced at $2,619, slightly above crucial support at $2,579. If market activity slows further and demand for the altcoin declines, bulls may struggle to maintain this support level. In such a case, Ethereum’s price could drop toward the next significant support level at $2,264.
Read more: How to Buy Ethereum (ETH) and Everything You Need to Know
Conversely, a boost in Ethereum’s network activity could raise demand for the altcoin, having a positive effect on its price. If that occurs, Ethereum’s price could recover and potentially reach $3,336.
Disclaimer
In accordance with the Trust Project guidelines, this price analysis article is intended for informational purposes only and should not be taken as financial or investment advice. BeInCrypto strives for accurate, unbiased reporting, but market conditions can change without warning. Always perform your own research and consult with a professional before making any financial choices. Kindly note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
