Ethereum Sets Network Activity Record but Strong Outflow: Where Will ETH Price Go?

Activity on the Ethereum (ETH) network has continuously set new records in recent months, as the number of active addresses, smart contract calls, and total transactions all surged to unprecedented levels.

According to a report released Tuesday by CryptoQuant, the number of daily active addresses on Ethereum reached a record high of around 2 million in February, doubling the peak seen during the 2021 bull cycle.

Not only that, transfer transactions triggered by internal smart contract calls and the total number of contract calls also hit new highs, far exceeding levels from the 2018 and 2021 growth cycles. Notably, the number of contract calls per day surpassed 40 million, indicating increasing network usage.

However, the paradox is that despite the surge in core activity metrics, the largest altcoin in the market has lost more than 50% of its value over the past four months.

Transfer ETH Transactions | Source: CryptoQuant Historically, the sharp increase in smart contract activity and active addresses has often coincided with Ethereum’s price rallies, reflecting a close correlation between network usage demand and asset valuation. However, the significant price decline amid on-chain activity still booming indicates an increasingly clear divergence, the report states.

CryptoQuant analysts commented:

“The inverse relationship suggests that growth at the application layer of Ethereum no longer directly translates into higher ETH valuations.”

Instead, market capital flows are becoming the key factor influencing ETH price movements in the current cycle.

The report also points out that ETH deposits into exchanges are higher than Bitcoin’s, implying increasing selling pressure on the leading altcoin. Historically, this trend often appears near market top formations.

Additionally, the one-year change in Ethereum’s realized capitalization — an indicator reflecting net capital inflows and outflows — has turned negative, indicating capital is flowing out of the asset despite record-high network activity.

According to the report:

“In previous cycles, especially during 2017–2018 and 2021, sharp increases in realized capitalization often accompanied major ETH price rallies, reflecting new capital entering the network. Conversely, when this indicator turns negative — as in 2019 or during the 2022–2023 bear market — ETH prices tend to decline significantly.”

Realized Market Capitalization of ETH | Source: CryptoQuant

Ethereum Price Forecast: ETH Must Hold 20-Day EMA

Data from Coinglass shows that in the past 24 hours, the Ethereum market saw approximately $43.3 million in liquidations, with $24.6 million coming from short positions. This indicates that bears faced considerable pressure as prices recovered in the short term.

On the daily chart, ETH is currently trading around $2,055. The short-term trend remains neutral but slightly leaning bullish, as the price stays above the 20-day EMA near $2,024 — an important support zone that has helped recent recoveries.

However, the 50-day EMA around $2,219 remains well above, suggesting the overall technical picture is still a short-term rebound within a medium-term downtrend, rather than a confirmed bullish trend.

Daily ETH/USDT Chart | Source: TradingView

Momentum indicators also reflect market caution. The RSI is steady just below the neutral 50 level, while the Stochastic Oscillator hovers in the neutral zone, indicating downward pressure is waning but bullish momentum is not yet strong. Additionally, recent trading volume shows no signs of panic selling, implying market sentiment remains relatively stable.

From a technical standpoint, the nearest resistance is at $2,108. If the daily close surpasses this level, the upward move could extend to $2,389, and further to $2,746 if buying momentum continues.

On the downside, the first support is at $1,741. If this level is broken, the price could retreat to deeper support zones at $1,524 and $1,405.

Overall, as long as ETH maintains above the 20-day EMA and key support levels, the market is likely to favor a buy-the-dip strategy rather than experiencing strong panic selling when prices weaken.

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