Ethereum’s Prospects in Bitcoin’s Shadow: Key Metrics to Watch

• Ethereum whales accumulate, signaling confidence and reducing potential sell pressure.
• Layer 2 solutions impact new addresses but boost Ethereum’s ecosystem demand.
• Daily transactions rise modestly, hinting at growing activity yet below bull market peaks.

Despite Bitcoin’s dominance in the current rally, Ethereum is also displaying strong potential for a significant price surge, according to on-chain data.

As per IntoTheBlock data, Ethereum has historically shown strong price performance following Bitcoin rallies, benefiting from profit rotations. However, several key on-chain metrics offer mixed signals, adding complexity to Ethereum’s outlook.

On-Chain Activity Shows Mixed Signals for Ethereum

Ethereum’s on-chain data highlights interesting trends. Daily transactions on the network have risen slightly, now averaging 1.22 million compared to 1.1 million three months ago. 

This increase signals growing activity, though it remains modest compared to past bull markets. Transaction volumes are steadily climbing, reflecting growing interest from institutions and large holders.

Whale activity stands out as a bullish indicator. Large holders have been accumulating ETH, reducing potential selling pressure. However, new Ethereum addresses remain below previous bull market levels, influenced by the rise of Layer 2 solutions like Base. While these solutions enhance scalability, they still rely on Ethereum as their settlement layer, ensuring continued demand.

Key Indicators Suggest Potential Upside for ETH

Several key metrics reveal Ethereum’s readiness for a potential breakout. Exchange flows have shown a reduction in inflows, indicating minimal selling pressure as investors opt for long-term storage. 

Short-term holders, typically more speculative, have seen some growth, suggesting renewed retail interest. Meanwhile, the holding time of transacted coins remains high, signaling that long-term holders are not selling, keeping supply constrained.

Ethereum’s ecosystem growth also underscores its value proposition. With the network processing over $40 billion in daily trading volume and trading at $3,309.88, Ethereum is up 7.12% in the last 24 hours. If Bitcoin stabilizes at its current highs, Ethereum could leverage its improving fundamentals to stage a strong rally.