The recent sentiment shift in the market has renewed the prospects of interest in the Ethereum DeFi ecosystem. Here’s what on-chain data has to say.
Edited By: Ann Maria Shibu
- TVL and stablecoin market cap inflows indicate a confidence uptick.
- Ethereum could be on the verge of a DeFi revival after weeks of declining demand.
The Ethereum [ETH] network demonstrated a noteworthy decline in network activity over the last few months. An outcome that was a reflection of the state of DeFi in an environment characterized by weak demand.
Ethereum has historically demonstrated strong network activity and engagement in its DeFi ecosystem especially during bullish market conditions.
The market has so far achieved a bullish performance week, with rate cut announcements acting as the catalyst. Will this be enough to reignite interest in Ethereum’s DeFi landscape?
So far the Ethereum network has registered some healthy activity that may point towards recovery. The network’s stablecoin market cap might offer some perspective of the situation.
Ethereum’s stablecoin market cap (green) peaked at $82.154 billion in April and has been declining since then. It recently bottomed out at $78.20 billion at the start of August. It has since bounced back slightly to its $83.84 billion level at the time of observation.
The Ethereum TVL (blue) also dipped considerably since its $66.91 billion local peak in June, to sub $43 billion lows. However, it has since recovered to $47.79 billion. This recent recovery may indicate the return of confidence in the Ethereum network.
Is Ethereum out of the woods yet?
Ethereum registered a notable spike in its network to fee ratio since mid-September. This is the second highest uptick in the metric that we have observed in the last 3 months. It confirms rising fees as a result of fees generated by more network activity.
This surge demonstrated correlation ETH’s recent bullish price action and was in line with improved sentiment in the crypto market. It may thus not be an ideal representation of Ethereum’s DeFi ecosystem’s performance.
While the above findings underscore some improvement in the Ethereum ecosystem, there are still signs of underperformance. For example, the number of active Ethereum addresses was still close to its YTD lows.
In other words, the network hype was still low despite the recent boost in activity. This may have a negative impact on ETH price action. For example, whale and institutional sentiment was bearish according to recent observations.
Read Ethereum’s [ETH] Price Prediction 2024–2025
The analysis suggests that the recent ETH uptick was mainly fueled by retail demand. It may also indicate the possibility that the recent price uptick might be short-lived especially if smart money remains bearish for longer.
Also, it may take weeks or months for robust liquidity to flow back into the crypto market.
