Ethereum price falls below $1.1K and data suggests the bottom is still a ways away

The Ether (ETH), price fell below $1,100 in early June 14, a level not seen since January 2021. This is a 78% decline from the Nov. 10, 2021 high of $4,870.

Ether outperformed Bitcoin (BTC), by 33%, between May 10th and June 14th 2022. The last similar event was in mid-2021.

Binance, 2021 ETH/BTC Price Source: TradingView

Although Bitcoin fluctuated in a narrow range for two weeks prior to the 0.082ETH/BTC peak peak, this period was the “DeFi summer’ peak when Ethereum’s total value locked (TVL), soared to $93 billion from $42 Billion two months earlier.

What is Ether’s underperformance in 2021?

To understand the reasons for the 31% correction in ETH/BTC’s price in 2021, it is important to have a wider range of data. It is worth starting with the number of active addresses.

Daily active addresses of the Ethereum network, 7-day average Source: CoinMetrics

Data shows steady growth of active addresses. They increased from 595620 in March to 857520 in May. Investors were not surprised by the TVL’s growth, nor was the increase in users.

After unprecedented growth in Ethereum’s ecosystem, the 31% Ether performance versus Bitcoin in June 2021 was a reflection of a cooling period. It was a devastating result for Ether’s value and there was a 56% correction following that “DeFi summer.”

Coinbase, 2021. Source: TradingView

To see if Ether is headed in the same direction, it is necessary to compare current data. The 31% hit versus Bitcoin’s price was a result of those who bought Ether at a low cycle near $1,800 in June 2021. However, the price soared 83% in 50 day.

Is Ether flashing a buy sign right now?

There is no DeFi Summer this time and the active address indicator was slightly bearish before this year’s 33% performance against Bitcoin.

Daily active addresses of the Ethereum network, 7-day average Source: CoinMetrics

Ethereum had 563 160 active addresses as of May 10, 2022. This is a decrease from the previous few months. This is exactly the opposite of what happened in mid-2021 when Ether price lost more BTC terms.

You might think that the Ethereum network has been growing despite having a small number of users. This is because it offers a higher TVL.

Total value of Ethereum network, USD Source: Defillama

Data shows that the Ethereum network TVL had $87 billion in deposits on May 10, 2022. This is down from $102 billion one month earlier. There is no correlation between the “DeFi summer” mid-2021 cooling off and the 33% Ether price decline compared to BTC.

These metrics do not show any similarity between the periods. However, $1,200 could be considered a low-cycle number. This will depend on many factors other than the network’s usage.

Investors should be cautious when trying to predict the bottom of the market, given how fragile TVL and active addresses were prior to the recent price correction.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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