Ethereum's price plummets to $1,100, and data suggests that the bottom is still a long way off

Ether’s (ETH) price has stuck at around $1,100 for the past few days, though a number of data points suggest that the sell-off is not yet over. Ether (ETH) prices plummeted below $1,100 in the early hours of June 14, 2019, to levels not seen since January 2021. Since its all-time high of $4,870 on November 10th 2021, ethereum’s price has corrected by 78%.

Ether has underperformed Bitcoin (BTC) by 33% from May 10 to June 14, 2022, and the last time something similar occurred was in mid-2021.

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

Despite the fact that Bitcoin fluctuated in a small range two weeks prior to the 0.082 ETH/BTC peak, this time was dubbed the “DeFi summer” high, when Ethereum’s overall value locked (TVL) rose from $42 billion to $93 billion over two months.

What caused Ether’s underperformance in 2021? A more comprehensive set of data is required to figure out what caused the 31% price decline in ETH/BTC in 2021. The number of active addresses is a good place to begin.

Active addresses have increased by over 10,000 since mid-March, when they stood at 595,620. As a result of this and the TVL’s growth, investors were taken aback by both the number of users and the TVL’s development. After more than doubling in price between June 2021 and June 2022, Ether saw a precipitous collapse that led to a 56% drop in value.

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

One must evaluate present data in order to assess whether Ether is approaching the same fate. In that regard, those who waited for the 31% miss against Bitcoin’s price bought the altcoin at a cycle low of approximately $1,800 on June 27, 2021, and its value has since risen 83 percent in 50 days.

Is it now a good time to buy Ether? There will be no DeFi Summer this summer, and the active address indicator has been somewhat bearish since before last year’s 33 percent negative performance against Bitcoin.

Despite the fact that the number of users remained relatively constant, Ethereum had been expanding, according to one’s viewpoint, by providing a greater TVL.

According to statistics, on May 10, 2022, the Ethereum network TVL had $87 billion in deposits, down from $102 billion a month previously. As a result, there is no connection between the mid-2021 cool-off after “DeFi summer” and the current 33% Ether price drop versus Bitcoin. These numbers suggest that although there is no resemblance between the two periods, $1,200 could be a cycle low; this will depend on other variables.

Given how weak active addresses and TVL data were prior to the most recent price decline, investors should exercise caution when attempting to forecast a market bottom.

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