CryptoQuant warns that Ethereum may drop to $1,500
TLDR
CryptoQuant suggests that Ethereum may fall to $1,500 if bearish market conditions continue. The company reported that the number of daily active addresses on Ethereum reached a peak last month. Despite increasing network activity, ETH is down more than 50% from recent cycle highs. CryptoQuant exchange flow shows strong selling pressure on ETH compared to Bitcoin. The one-year change in Ethereum's realized capitalization has turned negative, indicating a capital outflow.
As onchain data shows the disparity between network usage and price performance, Ethereum may experience further decline. CryptoQuant said ETH could drop to $1,500 if bearish conditions continue. The firm linked its outlook to rising foreign exchange inflows and weakening capital trends despite record activity.
Ethereum adoption increases when the price decreases
CryptoQuant reported that daily active addresses on Ethereum reached an all-time high last month. The firm noted that usage levels are above record during the 2021 bull market. However, ETH has fallen more than 50% from recent cycle highs.
The firm describes this gap in the Ethereum network as the “adoption paradox.” He said increased user growth would not support strong price action as in previous cycles. Instead, price trends now differ from onchain participation metrics.
CryptoQuant has tracked the rise of smart contract activity in decentralized applications. As decentralized finance and Layer 2 networks proliferate, internal contract calls have peaked, he said. Internal calls occur when smart contracts perform transactions within applications.
“The historical relationship between smart contract activity and the price of ETH has been broken,” CryptoQuant said. He added that previous cycles showed a more pronounced positive correlation between contract activity and price gains. Now, high transfer counts do not coincide with an increase in ETH value.
The pressure of exchange income and capital trends ETH
CryptoQuant says exchange flows provide a clearer signal for ETH's price direction. The firm noted that exchange deposits often indicate selling pressure. He said that higher inflows against Bitcoin suggest stronger relative sales activity.
“The higher exchange rate of ETH against Bitcoin indicates strong relative selling pressure on ETH,” CryptoQuant said. The firm added that this trend helps explain ETH's underperformance against BTC. When traders prepare to sell assets, they move capital into the exchange, he said.
Julio Moreno, head of research at CryptoQuant, outlined a negative outlook for ETH. If the bear market continues, ETH could fall to around $1,500, he told Bloc. He said this level could be seen at the end of the third quarter or the beginning of the fourth quarter of this year.
CryptoQuant also highlighted the weakening of investment demand in the network. He said that the one-year change in Ethereum's realized capitalization has turned negative. That metric tracks net capital flowing into or out of the asset over time.
Moreno says Ethereum needs a renewed influx of capital to reverse the trend. “To get out of the bear market, we need to see a positive capital flow and a low exchange rate for ETH,” Moreno told Bloc. ETH traded at $2,070 at press time, up about 0.5% in 24 hours.
