• Flatlines in ETH price and a drop in Ethereum’s daily active addresses raises fears of a possible decline ahead.
• ETH’s downside target comes around 40 percent lower than the current price levels.

Ethereum’s daily active address (DAA) count has dropped significantly between July 2022 and now. Yet, many fear Ether’s price may fall further in the next few weeks. According to data from on-chain analytics firm, Santiment, Ether’s DAA declined to 152,000 on Friday, October 21.

It also reached similar levels in June 2022. The drop indicates that fewer unique addresses were engaging the network. Coincidentally, the fall follows Ether’s more than 80 percent price decline from its November 2021 peak of nearly $4,850.

Two inferences could be drawn from this coincidence. First, the current crypto winter is also partly responsible for the decline in user interaction with the Ethereum blockchain. Second, Santiment analysts believed that the coincidence could also result from a “drop of weak hands.”

Weak hands are traders who stop engaging with a network because of the market’s bearishness. The analysts said, “there is a peak in disinterest as Ethereum’s price stagnates.” This lack of interest is also evident in several Ethereum-based investment funds.

Coinshares’ newest weekly data stated that these funds saw outflows of nearly $4 million in the week ending October 14, 2022. Furthermore, these outflows have now reached $369 million on a year-to-date basis.

Ethereum and inflation-related macro risks

Global central banks’ stricter policies to curb the spike in inflation have caused crypto prices to decline massively since the start of the year. However, these prices would likely keep dropping as the government’s tightening policies haven’t driven a reduction in inflation rates.

Hence, these inflation-linked macro risks could cause Ethereum to suffer more. Put differently, the ETH/USD pair drops below the current rising trendline support, triggering the classic ascending triangle. This continuation setup could cause ETH’s price to keep dropping till it reduces by about 40 percent of its current price or lose nearly $750 of its current value.

In contrast, a rally from the lower trendline could cause Ether’s price to surge to about $1,800 by this month’s end. If that happens, that will represent a 40 percent rise from its current price.

Ethereum whales increase their ETH holdings

Meanwhile, another Santiment data has revealed that Ethereum whales have been buying ETH coins since September 11. The data estimated that whale Ethereum wallet addresses (wallet addresses with at least one million ETH) had added a combined 3.5 million ETH to their portfolio.

At the moment, there are 132 such addresses. These new additions mean a 14 percent rise in whales holding the second-largest digital asset. As of this writing, the total ETH holdings of whale wallets have reached a new peak of 28.55 million ETH.