CryptoQuant analyst says the spike in Ethereum active addresses is not a bullish signal.
In a CryptoQuant Quicktake shared earlier today, CryptoQuant analyst Maartunn disclosed that the recent spike in Ethereum active addresses is not a bullish signal as it has historically indicated a local market top.
Retail investors active on Ethereum network
"There are many active addresses, isn't that bullish? In my opinion, no it's not. "
— CryptoQuant.com (@cryptoquant_com) August 2, 2022
“When we observe the historical data on Ethereum: Active Addresses, something that catches the eye is that every time when Active Addresses spiked above 575K, it pointed a local top,” the analyst wrote.
As reported by The Crypto Basic on July 28th, the Ethereum network saw a sudden rise in the number of daily active addresses, reaching 1.06 million, 48% higher than the previous record.
According to Maartunn, the spike indicates an increased presence of retail traders jumping in out of fear of missing out. It is worth noting that this fear of missing out (FOMO) usually characterizes the end of upward market rallies. While Maartunn opines that it is just a single indicator and that it should not be solely relied on, he also notes that it is one to be taken seriously.
It is worth noting that Ethereum, in recent weeks, has shown impressive price performances. For example, as reported by The Crypto Basic, the asset on Friday peaked above $1,700 following a spike in active addresses that experts struggled to explain at the time.
Notably, this latest rally driven by Ethereum merge speculation saw Ethereum and Ethereum Classic surge by about 55% and 190%, respectively.
However, while the price of Ethereum surged, there have been voices that have called for caution as certain indicators predicted the move might be short-lived. For example, veteran analyst Peter Brandt noted at the beginning of the move that the breakout lacked volume. Notably, other pundits have raised concern over the continuous inflow of Ethereum to exchanges, with Santiment recently estimating that the volume of Ethereum held on exchanges makes up 0.5% of the total supply.
It is worth noting that the long-anticipated Ethereum merge is expected a little over a month from now. Meanwhile, at the end of this week, the merge is expected to start on the final Ethereum testnet, Goerli. Ethereum is trading at the $1,577 price point, down 7.19% in the last 24 hours but up 9.75% in the last seven days.