The launch of a new token has made Ethereum deflationary. The token represents more than 25% of the network fees.
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 transitioning to the Proof-of-Stake consensus algorithm from 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 more than 1 ETH hit a new all-time high, according to on-chain analytics platform Glassnode.
Santiment tweeted that, “Ethereum saw a surge of new addresses created Saturday, with 135,780 new $ETH addresses popping up on the network. This is 11.1% more network growth than the next highest of 2022 (Jan 3rd). Utility rises commonly foreshadow potential asset breakouts.”
What Drives ETH Addresses to a New High?
Ethereum’s news about The Merge can be seen as a determining factor. Several dApps have moved onto the Ethereum network, creating new addresses.
But there is a widespread belief that the launch of a new cryptocurrency, XEN, is driving on-chain activity on Ethereum. It has accounted for more than 25% of network fees, worth more than $900,000 in the last 24 hours, according to data from Etherscan.
What is XEN?
XEN is designed by the Fair Crypto Foundation, which claims that it is Proof-Of-Stake crypto. Whoever participates in the creation of XEN has full ownership rights through self-custody. According to the litepaper, creating a new XEN is similar in difficulty to Bitcoin mining.
It is worth remembering that a litepaper is a shortened more concise version of a whitepaper and serves to pique the interest of curious users and investors.
The project is founded by a former Google employee, Jack Levin. Anyone can mint XEN tokens by connecting their wallet to the XEN smart contract. Users are believed to claim XEN tokens from new wallets to claim rewards.
Jack Levin states that, “the first principles of Blockchain that anyone can coin for themselves, by connecting an Ethereum-compatible wallet, setting a time limit, and sending a transaction.”
Ethereum (ETH) Price Fights
Despite the massive increase in on-chain activity and news from Ethereum that the network is temporarily going deflationary, there is no positive impact.
ETH price closed below the 200 weekly simple moving average (SMA) support yesterday, on a daily time frame. Ethereum price should hold and close above the 200 weekly SMA before the weekly close to hold the $1,200 level.
ETH price is struggling to hold the support around $1,281. That is a critical area because there was strong resistance from June to July in this price range as well.
Also, the price of ETH is forming a bearish flag which is a bearish pattern. If there is a breakdown, the price may visit the $1,000 area again.
Closing below this area will result in more pain for ETH price because there will be a bear flag breakout, a breakout of the 200 weekly SMA, and a major horizontal support breakout.
By Audy Castaneda
