This is why Ethereum (ETH) has comfortably surpassed $4.5K

This is why Ethereum (ETH) has comfortably surpassed $4.5K
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The activity on the Ethereum blockchain is rising again, and it means more usage for ETH token that keeps it above the $4.5k line. The number of active addresses on the blockchain means transactions are on the rise, and people pay ETH for their gas fees. Although there are many challenges because of high gas fees on Ethereum, these increases mean more confidence in the network and more possible gains.

According to the latest analysis by Santiment, address activity is up about 48% on the Ethereum blockchain since the last dip in late September. The rise has been correlated with a ride in ETH price and can be considered as the main reason ETH easily surpassed $45K. There are many other metrics like social volume, network profit/loss, and address activity affecting the Ethereum stats. The Santiment analysis for them is published in a detailed report.

We saw an ATH in the Ethereum price chart two days ago at about $48.5K. Although ATHs can be risky and result in price corrections, optimism about ETH is still high, and some predict the $5K price target. An important metric on the current state of Ethereum is a divergence between price and trading volume. Price is going high, but the trading volume is somehow declining.

Next to the divergence between price and trading volume on Ethereum charts, other metrics are showing divergence with price, too. Active addresses, social volume, and network profit loss, for example. The outcome can be a bearish signal for Ethereum. According to Santiment report:

“People too relaxed to take profits even though ETH is going up (visible in NPL). There is a good chance they will be punished. There is a 50/50 chance market quite often moves up one more time after divergence. Just to confuse traders. Looking at on-chain metrics, we are generally bearish.”

The prediction Santiment offers can be confusing for some traders. Many are bullish for Ethereum and predict it will record another ATH at about $5K. But the fact is the holders are now very confident about their earnings, and the activity isn’t increasing significantly. Besides, when the social volume isn’t increasing for a token, it can be a red flag people aren’t confident enough about that token.

After all, there could be ATHs in the price chart of ETH yet. But until the activity on the blockchain and network profit/loss are showing divergence with the price, we can’t be very sure the price continues the uptrend. On the other hand, $4.5K looks like a reliable support level, and the price may consolidate around it for a while.

If you found this article interesting, here you can find more Ethereum News


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