The Impressive Surge in Active Ethereum Wallets: What Does It Mean?
The Ethereum (ETH) network experienced an unprecedented surge in network activity on Wednesday. Specifically, the number of active wallets reached a level that has only been surpassed once in the entire history of the Ethereum blockchain. What does this signify about the current state of the popular layer-1 blockchain?
A Surge in the Number of Active ETH Wallets
The well-known crypto analysis platform Santiment recently revealed an interesting finding on X, formerly known as Twitter. It reported that on September 13, the number of active Ethereum addresses witnessed a significant increase, reaching a peak of 1,089,893 addresses. The highest number of active addresses was recorded on December 9 last year.
So, what exactly does the term “active wallets” mean in the context of a blockchain? In simple terms, it refers to the number of addresses involved in transactions within a specific period, in this case, one day. A wallet is considered active when it either sends or receives a transaction.
The tally of active wallets is just one of the many data points that can be used, thanks to the transparent nature of the blockchain, to assess the health and activity of the network. The surge in network activity indicates a growing demand for the Ethereum network, making it potentially bullish for the price of Ethereum. Santiment suggests that “this historic anomaly could be the capitulation signal needed for prices to rebound.”
Paradoxical: Ethereum Facing Inflation Despite Surge in Active Wallets
Earlier this week, we reported on Crypto Insiders that Ethereum is currently experiencing inflation after a prolonged period of being deflationary. Inflation simply means that there is currently more Ether in circulation. This is due to the fact that the average gas fees, or transaction fees, on Ethereum are currently at their lowest point since early 2022.
Since the fees paid on Ethereum are destroyed, the network has mostly been deflationary since the merge. After transitioning from Proof-of-Work (PoW) to Proof-of-Stake (PoS), significantly less new ETH is introduced into circulation. The network only experiences inflation during periods of extremely low activity and gas fees.
This makes the immense surge in the number of active wallets even more notable. Over the past few months, the number of active wallets has consistently hovered around 400,000 on a daily basis.