"Network is hot"...Why is Ethereum (ETH) price 'stuck'?

▲ Ethereum (ETH)/AI Generated Image

The Ethereum (Ethereum, ETH) network heated up rapidly, but its price remained stagnant. The on-chain growth failed to translate into price increases as institutional demand and exchange buying funds in the U.S. did not recover.

According to The Crypto Basic, a cryptocurrency specialized media outlet, on August 4 (local time), two reports published by CryptoQuant analyzed that Ethereum's network usage and staking are increasing. Conversely, weak buying interest from U.S. investors and subdued exchange activity were identified as factors limiting short-term price increases.

CryptoQuant analyst Arab Chain stated that Ethereum's Coinbase Premium Index recorded minus 0.0833. This means that the price of Ethereum on Coinbase (Coinbase, COIN) is lower than on Binance. The index briefly turned positive in April but fell back into negative territory in early May and has not recovered since. This indicates that demand from U.S. investors and institutions remains weaker compared to other regions.

Network activity moved in the opposite direction. Ethereum closed at $1,883 on August 2, remaining within the $1,840-$1,950 range, but new smart contract deployments increased by 82.3% over the past 90 days. The median transaction fee tip more than doubled, and the median token transfer volume for regular wallets and smart contracts also increased by 50-80% compared to the quarterly average. CryptoQuant contributor CryptoOnchain analyzed that these indicators demonstrate the network's natural growth trend.

New buying funds decreased on exchanges. The overall net fund flow for exchanges fell to 354% below the 90-day baseline. Binance's net stablecoin inflow was also 120% lower than the 90-day average, and the top 10 exchange deposit/withdrawal volumes decreased by approximately 40% during the recent quarter. This suggests that investors are not aggressively moving funds to exchanges to buy Ethereum.

Ethereum's staking ratio rose to 33.97%, reducing the amount available for trading in the market. CryptoOnchain explained that in past instances where increased on-chain activity coincided with sluggish U.S. spot demand, supply gradually tightened. However, it assessed that it would be difficult to generate strong price appreciation while the Coinbase Premium remains negative.

[Article Key Summary]

-New smart contract deployments for Ethereum increased by 82.3% over the past 90 days, but the price remained in the $1,840-$1,950 range.

-The Coinbase Premium Index recorded minus 0.0833, indicating weak buying demand from U.S. investors and institutions.

-The staking ratio rose to 33.97%, but exchange fund inflows and trading activity by large holders slowed down.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*