The Sunday Chart – New Daily Wallets v ETH Price

Here are this week’s charts (both of which display the same relationship – ETH price vs new wallets):

Temporal: https://imgur.com/jsCQTdc

Sequential: https://imgur.com/whESPAP

Note: the sequential version has no time axis – the daily new wallet numbers since January 2017 are plotted in ascending order (in orange), along with the corresponding price data for that day (in blue, above or below). In this chart time zig-zags back and forth depending on whether the market was rising or falling. What this chart shows is the correlation banding that occurs as the market rises and falls. For any given wallet number, there seems to be a “favourite” price band.


There has been more price volatility in the last couple of weeks, and much speculation about what’s been causing it. The developers of the EOS coin have come in for particular stick, as they appear to hold an enormous quantity of Ether, and have apparently sold quite a bit of it recently in a hurry. As this has coincided with serious criticism of the EOS system (and especially claims that there are severe shortcomings in the code), it is no surprise that some have accused the people behind EOS of cashing out. Whatever the case, the ETH price has not nosedived as some predicted (I’m very happy to see $600 again this morning. Like many, I was bracing myself for another dip into the doldrums), and there has been a relentless slew of good news stories and development milestones that augur well. Given my interest in the relationship between price and adoption, I’d like to focus on just one: the story that there are now more Ethereum addresses than Bitcoin addresses – https://www.trustnodes.com/2018/05/30/ethereum-now-35-million-unique-addresses-surpasses-bitcoin-active-addresses

Let’s not worry about the dodgy writing in that piece – if I could write as well as that in another language I’d be very happy.

The comparable metrics that matter most are active wallets, total transactions, and sent-from addresses. In all three categories, Ethereum is now level pegging or well ahead of Bitcoin. Are there more Ethereum holders than Bitcoin holders? Impossible to say at the moment, but I doubt it. If we ask that question in a year’s time however, we might well get a positive answer.

The headline number of accounts opened are of secondary importance – why? A number of reasons, not least because the two systems use wallets in different ways. Bitcoin addresses, for instance, cannot be reused safely, while Ethereum addresses can. Blockchain.info claim 25 million wallets have been opened on their system, and Coinbase claim 30 million accounts on theirs. This obviously does not mean that there are 55 million people who own crypto of some sort. Millions of Bitcoin wallets – most of them probably – are old wallets that are now burned, and many people hold multiple accounts on both systems, etc.

In the data I track, the relationship between price and adoption has been very tight until this year, when a gap has appeared. Generally, price has remained a bit higher than we might expect. I think this is a nascent artifact of the network effect and if the wallet numbers carry on increasing that gap will grow further. My hunch (for what little that is worth) is that the ETH price will remain in the $600-$800 band until the new daily wallet numbers are consistently in the 200,000 region. At that point we’ll see the price pop up into the next band, which could be in the $1000-$2000 range.

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