3 key metrics on the chain suggest Ethereum price is in a 2017 style bull run


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The price of Ether (ETH) is currently somewhere between $ 440 and $ 470, similar to December 2017. Back then, the scenario was incredibly optimistic and the altcoin quickly soared to $ 1,400.

Fast forward to 2020 and some investors believe a similar outcome could occur as some key on-chain and technical indicators reflect levels from the previous bull run.

On December 10, Ether was priced at $ 450, and it took only 34 days for Ether to hit its all-time high. Before this price explosion, the altcoin traded sideways for over two weeks. Should something similar happen, on-chain metrics and historical data suggest that it could happen in the next ten days.

Ether in December 2017 (left) versus November 2020 (right). Source: TradingView

Note how recent price movements have raised investor hopes that the next crypto bull market will mirror the market watched in late 2017. While price is an important metric, it does not provide granularity for network usage and volume.

To evaluate the size and quantity of daily transactions, Coinmetrics provides customized transactions and transfers data.

Ether daily average transactions (left) against ETH price. Source: Digital Assets Data

The graph above shows $ 1.9 billion in recent transfers and transactions, up 46% from the previous month. Although Ether’s price hike undoubtedly helped, the same effect occurred in late 2017.

Daily average transactions and transfers fictitious. Source: CoinMetrics

The daily average face value settled and transmitted on the Ethereum network in November 2017 was $ 830 million. That changed until the end of the month when the indicator topped the $ 2 billion mark. This indicator is closely related to the current scenario.

In order to better assess network activity, the daily number of active addresses should also be analyzed. Although it should not be interpreted as the number of active users, it does provide a reliable network usage indicator.

Daily active addresses (right) and ether price (left). Source: Digital Assets Data

The November data appears to repeat the previous month’s high with 550,000 active addresses per day. This time around, the activity appears to be at a much higher level than it was in late 2017.

Of course, you may have to adjust to the increasing use of decentralized financial resources (DeFi) and stablecoins. Revenue pools and decentralized exchanges are responsible for tens of thousands of daily multi-address transactions.

Ether daily active addresses. Source: CoinMetrics

As was to be expected, the number of daily active addresses in November 2017 was 200,000 and thus significantly below the current number. Nevertheless, by the end of the year they were able to access up to 500,000 network addresses per day.

The on-chain analysis may have been close enough to the current state, but the price development is highly dependent on the volume. After all, trading activity is not necessarily directly related to network usage.

Ether average daily volume. Source: Messari

The current average daily volume of USD 1.3 billion corresponds to an increase of 50% over the previous month. This data is a remarkable fact as it does not involve any decentralized exchange.

Ether daily transparent volume. Source: Messari

Oddly enough, the current ether volume falls at the same level as it was in December 2017. Hence, one might conclude that this is too much of a coincidence to be ignored.

The current daily active addresses, fictitious transactions / transfers and the traded volume coincide with the end of 2017 when Ether was trading near the $ 450 mark.

Because of this, analysts have good reason to believe that a bull run of $ 1,400 in the next few weeks is within the realm of possibility.

Will renewed decentralized financing (DeFi) be enough to generate an inflow similar to that in the 2017 ICO era? Or will it be institutional and larger investors sustaining a strong 300% rally?

Remember, as the saying goes, “History doesn’t repeat itself, but it often rhymes.”

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading step is associated with risks. You should do your own research when making a decision.