The Sunday Chart – ETH price vs New Wallets

Here is today's chart –

I may have been slightly over optimistic here and there over the last few months. Charitable readers might say that I have merely been early in my predictions. Whatever the case, I really do think that at long last there is cause for at least a small fist pump. As several commentators have pointed out over the last few days, it looks as if a bottom is forming. A couple of weeks ago I (somewhat optimistically) wondered about the possibility of a crossover occurring – where the number of new wallets being funded daily is proportionally higher than the ETH price (the red and blue lines cross over). I am happy to report that for the first time in almost 3 months that has now happened (the weekend numbers are almost always down on the week days, so I'm not surprised it has blipped down again). We also have a clear lift in transaction volume and total active wallets. The price may still wobble a bit before we rally, but unless something shocking and unpleasant occurs, I think we are at, or near, the bottom of this cycle. In plain speak, there is light; the end of the tunnel cannot be too far away.

I also think that with the price falling so hard against a backdrop of mostly extremely positive news, there will be a strong rebound effect once this phase is finally over. This is not a rational market (in the economic sense); it tends to overshoot wildly in both directions. This is unfortunate but will almost certainly continue. I have added the (exponential) trend lines for both data series, to show just how dramatic a rally overshoot could be.

I previously thought that once this bear turns, price would lead wallet numbers, but it now appears that the next rally will be the other way around – people are getting in early. The two data sets are elastically connected – like two drunk men joined by a bungee cord staggering across a field.

As I have stressed before, we don’t know how many people come and go from the Ethereum ecosystem. If the wallet numbers are positive, as they always have been, then they must include some new entrants, but there are many reasons for existing ETH owners to open new wallets, and over the last 3 months I suspect there has been a net decrease in ETH owners. That looks about to change. Let’s hope so. Good luck everyone.