CryptoQuant: Influenced by the Ethereum "adoption paradox," the price of ETH may drop to $1500

According to The Block, on-chain analytics firm CryptoQuant states that Ethereum is facing an "adoption paradox," where network activity has reached an all-time high, yet the price of ETH has significantly dropped.

The research director at CryptoQuant indicated that if the bear market continues, ETH could further decline to around $1,500, a level that may be reached by the end of the third quarter or the beginning of the fourth quarter this year. Data shows that Ethereum's daily active addresses hit an all-time high last month, surpassing levels seen during the 2021 bull market, while ETH has fallen over 50% from the peak of this cycle. Activity generated by smart contracts and automated protocols has also surged, with internal contract calls reaching a historical high last month, but the historical relationship has deteriorated, weakening the positive correlation between ETH prices and contract-driven activity.

CryptoQuant points out that exchange inflows explain ETH price dynamics better than network activity metrics, and the higher exchange inflow ratio of ETH relative to Bitcoin indicates stronger relative selling pressure. The realized market cap of Ethereum has recently turned negative over the past year, suggesting that capital is flowing out, even as on-chain activity continues to grow. The research director stated that ETH needs to see positive capital inflows and lower exchange inflows to emerge from the bear market.