Network activity on Ethereum (ETH) has been hitting new records in recent months, as the number of active addresses, smart contract calls, and total transactions have all surged to unprecedented levels.
According to a report published Tuesday by CryptoQuant, the number of daily active addresses on Ethereum reached a record of around 2 million addresses in February, roughly double the peak recorded during the 2021 bull cycle.
Not only that, but ETH transfers triggered through internal smart contract calls and the total number of contract interactions have also climbed to new highs, surpassing levels seen in the 2018 and 2021 growth cycles. Notably, daily smart contract calls have exceeded 40 million, highlighting the rapidly increasing usage of the network.
However, a paradox has emerged. Despite the surge in core network activity metrics, the largest altcoin in the market has lost more than 50% of its value over the past four months.
Historically, sharp increases in smart contract activity and active addresses have tended to coincide with price rallies for Ethereum, reflecting the close relationship between network demand and asset valuation. This time, however, ETH’s price decline while on chain activity continues to expand suggests a growing divergence, according to the report.
CryptoQuant analysts noted:
“This inverse relationship suggests that growth at Ethereum’s application layer is no longer directly translating into a higher ETH valuation.”
Instead, market capital flows appear to have become the key driver influencing ETH price movements in the current cycle.
The report also points out that ETH deposits to exchanges are currently higher than those of Bitcoin, implying increasing sell pressure on the leading altcoin. Historically, this pattern has often appeared near market top formations.
In addition, the one year change in Ethereum’s realized capitalization, a metric that reflects net capital inflows and outflows from the network, has moved into negative territory. This indicates that capital is currently flowing out of the asset even while network activity remains at record levels.
According to the report:
“In previous cycles, particularly during 2017 to 2018 and 2021, strong increases in realized capitalization often accompanied major ETH rallies, reflecting fresh capital entering the network. In contrast, when this metric turns negative, such as in 2019 or during the 2022 to 2023 bear market, ETH prices tend to enter a significant downtrend.”
Ethereum Price Outlook: ETH Needs to Hold the 20 Day EMA
Data from CoinGlass shows that approximately $43.3 million in Ethereum positions were liquidated over the past 24 hours, including $24.6 million in short positions. This suggests that bearish traders have faced notable pressure as the price attempts a short term recovery.
On the daily chart, ETH is currently trading around $2,055.
The short term trend remains neutral but slightly bullish as the price continues to hold above the 20 day EMA near $2,024, a key support level that has supported the recent rebound.
However, the 50 day EMA around $2,219 remains significantly higher, indicating that the broader technical picture may still represent a recovery within a medium term downtrend rather than a confirmed bullish reversal.
Momentum indicators also reflect a cautious market stance. The RSI is hovering just below the neutral 50 level, while the Stochastic Oscillator remains in a neutral range, suggesting that downside pressure is gradually weakening but bullish momentum has yet to strengthen significantly.
At the same time, recent trading volumes have not shown signs of panic selling, implying that overall market sentiment remains relatively stable.
From a technical perspective, the nearest resistance level for ETH sits at $2,108. If the price manages to close above this level, the rally could extend toward $2,389, and potentially $2,746 if buying pressure continues to improve.
On the downside, the first support level lies at $1,741. If this level is broken, ETH could retreat toward deeper support zones at $1,524 and $1,405.
Overall, as long as ETH continues to hold above the 20 day EMA and key support levels, the market may continue to favor buy the dip strategies rather than a widespread sell off during periods of price weakness.
Managing Ethereum Assets Securely with Pulse Wallet
As Ethereum network activity reaches record highs, more users are interacting with smart contracts, DeFi protocols, and on chain applications than ever before. Increased activity also means that secure asset management becomes increasingly important for everyday users. This is where Pulse Wallet plays a role.
Pulse Wallet is a non custodial crypto wallet designed for users who want a simple and secure way to store, send, and interact with digital assets across modern blockchain ecosystems. The wallet integrates advanced security technology such as MPC based key management, helping reduce risks associated with traditional private key storage.
For users following the Ethereum market or actively participating in DeFi, Pulse Wallet provides a convenient interface to manage tokens, monitor assets, and interact with decentralized applications without relying on centralized exchanges.
As blockchain activity continues to expand, tools that prioritize both security and usability will play an increasingly important role in how users engage with the crypto ecosystem.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are highly volatile and involve significant risk. Readers should conduct their own research and consult qualified financial professionals before making any investment decisions. Pulse Wallet does not provide financial advice and is not responsible for any investment outcomes related to the information presented in this article.