Ethereum (ETH) Price Struggles to Hold $1,200 Despite Spike in Network Activity

Ethereum (ETH) price has declined but there is a rapid increase in new ETH addresses, the highest for 2022. What is driving a new high in network activity during the bear market?

The Ethereum network, after successfully transiting to the Proof-of-Stake consensus algorithm from the Proof-of-Work, is witnessing the highest network growth of 2022.

The growth is 11.1% more than the highest of 2022, according to the market intelligence platform, Santiment. The number of addresses holding 1+ ETH reached a new all-time high, according to the on-chain analytic platform Glassnode.

What drives ETH addresses to a new high?

The Ethereum news about the Merge upgrade can be seen as a driving factor. Various dApps have shifted to the Ethereum network, creating new addresses. 

But there is a wide belief that the launch of a new cryptocurrency, XEN, is driving up the on-chain activity in Ethereum. It has accounted for over 25% of the network’s fees, worth over $900,000 in the past 24 hours, according to the data from Ether scan.

What is XEN?

XEN is designed by the Fair Crypto Foundation, which claims that it is Proof of Participation crypto. Whoever participates in XEN creation has full rights of ownership through self-custody. According to the litepaper, the creation of a new XEN is similar to Bitcoin mining difficulty. The project is founded by an ex-Google employee, Jack Levin.

Anyone can mint XEN tokens by connecting their wallet to the XEN smart contract. Users are believed to be claiming XEN tokens from new wallets to claim rewards. 

Ethereum (ETH) Price Struggles

Despite the massive surge in on-chain activity and the Ethereum news that the network is turning deflationary temporarily, there is no positive impact. ETH price closed below the support of 200 weekly Simple Moving Average (SMA) yesterday on a daily time frame. The Ethereum price should hold up and close above 200 weekly SMA before the weekly closing to retain the $1200 level.

The ETH price is struggling to hold up the support at around $1281. That is a critical area because there was also strong resistance from June to July in this price range.

Also, ETH price is forming a bear flag which is a bearish pattern. If there is a breakdown, the price can again visit the $1000 area. 

The close below this area will result in more pain for the ETH price because there will be a bear flag breakdown, a breach of 200 weekly SMA, and a breach of important horizontal support.

What does your analysis of Ethereum price action say? For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.