Ethereum: Short-term pain or long-term gains for ETH holders

• Ethereum’s price fell while network growth and velocity plummeted
• On a macro level, Ethereum’s network continues to see growth

Ethereum [ETH] recorded a massive decline in price over the last 24 hours, along with the rest of the cryptocurrency market. At press time, ETH was trading at $3,267.60, with its value down by 7.22% on the charts.

Ethereum takes a hit

Over this period, the network growth for Ethereum declined significantly. This indicated that new users were losing interest in ETH and the number of new addresses willing to buy ETH at this rate was very low. Moreover, the velocity for ETH also fell, suggesting that the frequency with which ETH was being traded had declined.

Source: Santiment

Moreover, Ethereum’s MVRV ratio fell, indicating that the number of addresses that were profitable had fallen. Long/Short difference for ETH hiked as well, indicating that the number of long term holders of ETH had increased.

Source: Santiment

Looking at the larger picture

Even though in the short term it looks like ETH is struggling, the big picture is much more promising. In fact, it can be seen that Ethereum’s network has come a long way since last year.

For example – Staked Ether has seen significant growth over the past year, according to Nansen data, surging from 20 million to 32.2 million ETH. Despite a minor dip in staked ETH due to withdrawals from centralized exchanges following the roll-out of Shapella, there has been a remarkable 61% surge in staked ETH.

This represents a staggering $42 billion influx into Ethereum’s staking infrastructure, based on recent pricing.

Source: Nansen

Validator numbers have also seen significant growth since Shapella, alleviating concerns within the Ethereum community about a potential mass exodus of validators. According to Austin Blackerby, EVM Analytics Manager at Flipside Crypto, this growth has eased many fears.

This time last year, there were nearly 563,000 validators securing Ethereum. Since then, this figure has surged by over 74% to approximately 981,000 validators.

Sustained growth in validators has raised additional concerns among protocol developers and researchers, as outlined in a September 2023 report. A large validator set size strains peer-to-peer networking and messaging, potentially causing node failures due to high computational load and bandwidth requirements.

Read Ethereum’s [ETH] Price Prediction 2024-25

Source: Nansen

Additionally, a sizeable validator set makes future upgrades harder and riskier to achieve. The upcoming upgrade, “Electra,” is expected to address the challenges posed by the expanding validator set.

Simply put, the world’s largest altcoin’s long-term future seems more secure and promising than its short-term.