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While the price of Ether (ETH) has been stuck between $ 340 and $ 350 for the last month, multiple on-chain metrics suggest a recovery may be in the offing.
Santiment, a cryptocurrency analytics firm, recently noted that the number of deposits in exchanges has declined since the beginning of September. According to the company, the number of addresses used to send Ether to exchanges has seen a 53% decline since September 1.
Daily deposits of ether in the past 6 months. Source: Santiment
Although the selling pressure on Ether has decreased on exchanges, the number of new users on the network is steadily increasing.
Data from glassnode, an onchain analytics resource, shows that the number of addresses containing at least 0.01 Ether hit a new all-time high at 10,116,076.
Ether addresses that contain more than 0.01 coins. Source: glassnode
This growth is largely driven by the DeFi industry and just this week the Etheruem portfolio, MetaMask confirmed it has surpassed 1 million monthly active users, a figure that has tripled since February.
Crypto whales have also hoarded Ether at current principles, suggesting they believe altcoin is undervalued.
While it is difficult to attribute concrete value to crypto assets due to the high levels of market volatility, Ether was a top performer in 2020, and the altcoin still significantly outpaces the gains seen by Bitcoin.
Performance of Bitcoin and Ether YTD. Source: data on digital assets
According to Santiment, the top 100 Ether whales have accumulated Ether in the past 40 days and these addresses have increased their balance by more than 3.7 million Ether during this time period.
The DeFi business continues to expand
The decentralized finance industry dominated the cryptocurrency world in 2020 and is clearly one of the main reasons for the growing interest in Ether and other digital assets.
The growth of the industry has also strengthened the use case of Ethereum and put the spotlight on blockchain networks that provide Layer2 technology.
Total value locked in DeFi. Source: data on digital assets
The price of DeFi tokens took a hit in September, but user activity in the industry is still strong.
According to Digital Assets Data and DeFi Pulse, the total value stuck on DeFi is $ 10.5 billion, having grown 26% over the past 30 days.
Trading activity within the sector also reached new highs. Take for example the decentralized exchange Uniswap, which in September recorded a record monthly volume of $ 15.3 billion, a figure that surpassed Coinbase.
Other areas within Ethereum have seen increased activity. The non-fungible token (NFT) industry has seen sales volumes of more than $ 7.7 million in the past month, according to data from Non-fungible.com.
DeFi is going to have increasing pains
Although the chain analysis paints a bullish picture for Ether, it is also worth noting that the Ethereum blockchain currently stands on a weak footing as congestion and high fees continue to be a problem for the network.
This has led developers and various DeFi platforms to start researching and experimenting with blockchain networks that offer Tier 2 technologies. While the integration of Tier 2 solutions is unlikely to decrease the demand for Ether, other more threatening clouds are forming.
Last week the CFTC and the DOJ threw the hammer on BitMEX, arrested its co-founder and announced that the owners of the exchange were accused of operating an illegal derivatives exchange and violating laws. banking.
The US Department of Justice also announced on October 5 that John McAfee had been arrested in Spain for tax evasion and the US Securities and Exchange Commission (SEC) says McAfee has promoted Initial Coin Offerings (ICOs) without disclosing which was paid by ICO broadcasters to tweet about each project.
What is clear is that authorities and regulators intend to prosecute individuals and companies who evade the law to promote their crypto products and services.
Given that decentralized exchanges like Uniswap lack KYC and AML policies, DeFi could easily be the next target pursued by the SEC, CFTC, and DOJ, especially with the growing number of scam projects in space.
