Ethereum is seeing record activity. So why is its price struggling?

Ethereum has a dilemma. The network is seeing increased activity, and yet the price of its native token is struggling. 

Active addresses climbed to new all-time highs above 1.8 million to 2 million daily users last month, while transfers by smart contract interactions in the same period also reached record levels, data from blockchain analytics firm CryptoQuant shows. However, the network activity has not coincided with a strong asset performance for ethereum. 

“The disconnect with ETH price indicates that transactional activity alone is not translating into stronger investment demand,” CryptoQuant wrote in a Tuesday report. Instead of network activity, inflows provide a clearer signal for price dynamics — exchange and capital inflows capture the movement of capital toward potential selling venues. 

“The elevated ratio of ETH exchange inflows relative to Bitcoin suggests stronger relative selling pressure on ETH, helping explain its underperformance against BTC,” the report said. Bitcoin has dropped almost 20% year to date, while etheruem has declined nearly 31%. 

Ethereum’s one-year change in realized capitalization, a proxy for the net capital entering and leaving the asset, has also “fallen dramatically and recently turned negative, indicating that capital is exiting the network even as on-chain activity metrics reach record highs,” the report continued. 

Analysts’ constructive outlook

Despite the divergence between ethereum’s activity and price performance, fintech analysts led by Devin Ryan at Citizens JMP Securities laid out their constructive outlook on ethereum and leading treasury firm SharpLink Gaming in a note published on Tuesday, pointing to network’s share of the growing stablecoin and real-world asset markets. 

The outlook was also informed by institutional adoption of ethereum moving from pilots into production, autonomous agents executing on-chain transactions programmatically, and an evolving US policy backdrop following the GENIUS Act passage and progress on the CLARITY Act. 

The “recent ETH price volatility is detached from continued adoption within the Ethereum ecosystem, and as adoption continues, we project ETH’s price will increasingly be driven by real demand rather than overwhelmed by speculative flows still highly correlated to macro volatility,” the analysts wrote. “Our constructive ETH outlook is supported by growing adoption-driven demand for Ethereum blockspace, and we expect fundamentals to play a larger role through 2026.”

The price of ethereum sits at the $2,050 level, with traders betting on a move higher in March. Prediction market-implied odds of ethereum rising above $2,250 in the month has climbed to 54% on Wednesday, an increase from 43% on Monday.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)