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With Bitcoin capturing the majority of market attention, the top altcoin, Ethereum, has been out of the picture since Q4 took off. On the price front, BTC’s rise has piqued the market’s interest, whereas Ethereum has taken an underdog approach, with its development side looking particularly promising.
Demand for Ethereum makes a comeback
After a massive surge in Layer-2 protocols towards the end of Q3, demand for Ethereum blockspace seemed to have rebounded as the last quarter of the year began. Notably, Ethereum’s transaction fees surpassed $1 billion in September with an average transaction fee of $28.
After EIP-1559 went live, a staggering 55% net reduction in ETH issuance was noted with over 474K ETH ($1.7B) being burned. This in turn made way for s supply shock narrative which was bullish for ETH’s long-term trajectory.
However, as analyst SpencerNoon pointed out, Ethereum’s continued high fees hampered the user experience while also serving as a tailwind for increased user adoption of cheaper L2s and alternative L1s.
This could be one of the reasons why Ethereum’s active addresses were close to 577K, down nearly 25% from May highs. Nonetheless, a thriving NFT market, combined with Defi growth in the last quarter, indirectly enabled a more robust Ethereum ecosystem.
Healthy HODLing behavior
Ethereum HODL waves help track how active the current ETH supply is based on the last on-chain movement. Notably, 76% of the supply hasn’t moved in over six months and around 46% of the supply is in age bands of greater than one year.
ETH’s dominance in Defi, Ethereum staking, and CEX ETH reserves in cold storage are some of the major factors influencing HODL waves. However, one concerning factor was the fact that $306 million in ETH was deposited into exchanges, compared to $750 million withdrawn in the previous week.
With exchange inflows increasing, it appeared that there might be an increase in sell-side pressure to be absorbed around the price resistance level.
Development looking vibrant
Data scientist Daren Matsuoka stated that the Ethereum developer community “is more vibrant than ever.” In fact, more developers have entered the Ethereum ecosystem so far this year than the previous two years combined.
Over time, the GitHub stars on key developer repositories such as web3js, truffle, solidity, hardhat, ethersjs, OpenZeppelin contracts, web3py, and scaffold-eth were analysed to determine the growth of Ethereum’s developer activity.
Notably, over 39K Github accounts have now starred at least one of the key repositories. With its development activity on the rise and demand for the Ethereum network on the rise, the future of ETH appeared to be bright.