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


The price of Ether (ETH) fell below $1,100 in the early hours of June 14, a level not seen in prices since January 2021. The downside move marks a 78% correction since the all-time high of $4,870 on November 10, 2021.

More importantly, Ether has underperformed Bitcoin (BTC) by 33% between May 10 and June 14, 2022, with the last time a similar event occurred in mid-2021.


Binance, ETH/BTC price in 2021. Source: TradingView

Even though bitcoin oscillated in a narrow range two weeks prior to the 0.082 ETH/BTC peak, this period marked the “DeFi summer” peak, when Ethereum’s total value locked (TVL) increased from $42 billion two months ago to $93 billion Gone.

What’s Behind Ether’s 2021 Underperformance?

Before jumping to conclusions, a comprehensive set of data is needed to understand why ETH/BTC price improved by 31% in 2021. Looking at the number of active addresses is a good place to start.

Ethereum network daily active addresses, 7-day average. Source: CoinMetrics

The data shows a steady increase in active addresses, from 595,620 in mid-March to 857,520 in mid-May. Hence, TVL’s growth not only surprised investors but also increased the number of users.

The 31% Ether underperformance versus Bitcoin back in June 2021 reflects the cool-off period following the unprecedented growth in the Ethereum ecosystem. The result of the Ether price was disastrous and after the “DeFi summer” it corrected 56%.

Ether/USD price on Coinbase, 2021. Source: TradingView

One must compare the recent data to understand whether Ether is heading towards a similar outcome. In that sense, those who waited a 31% miss against the price of bitcoin bought the altcoin at the cycle low of $1,800 on June 27, 2021, with the price rising by 83% in 50 days.

Is Ether Showing Buying Signals Right Now?

This time around, there is no DeFi summer and the active address indicator was already a bit bearish before this year’s 33% negative performance versus bitcoin.

Ethereum network daily active addresses, 7-day average. Source: CoinMetrics

As of May 10, 2022, Ethereum had 563,160 active addresses, its lowest level for the past few months. This is in stark contrast to the mid-2021 movement, as the price of Ether accelerated its losses in terms of BTC.

One can still imagine that the Ethereum network was growing by offering a high TVL, despite the relatively flat number of users.

Ethereum Network Net Worth Lock, USD. Source: Difilma

Data shows that on May 10, 2022, Ethereum network TVL had $87 billion in deposits, down from $102 billion a month earlier. Therefore, there is no correlation between the mid-2021 cool-off after the “DeFi summer” and the current 33% Ether price drop compared to BTC.

These metrics show no evidence of parity between the two periods, but $1,200 a cycle could also be lower, depending on factors other than network usage.

Given how weak the active addresses and TVL data were prior to the recent price correction, investors should be extra careful when trying to predict market lows.

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