Last week, 7,728 ETH tokens were added to circulation, worth over $20 million at the current market price. As a result, the circulating supply of altcoins reached a 6-month high of 120.39 million ETH. The increase in circulating supply can put downward pressure on the price of Ethereum if new coin inflows do not keep up with demand.
This analysis explains the key price levels that holders should watch for as this situation unfolds.
Has Ethereum user activity decreased... On-chain signals have emerged
Ethereum's circulating supply represents the number of ETH coins available for public use. Coins that are non-transferable, reserved, or locked are not included.
According to data from Ultrasound Money, over the past 7 days, 7,728 ETH coins worth over $20 million at the current market price were added to circulation. A rapid increase in Ethereum's circulating supply typically occurs when user activity on the Layer 1 (L1) network decreases.
Read more: Ethereum ETF Explained: What Is It and How Does It Work
On-chain data from Artemis confirms this decline. Over the past week, the daily unique on-chain interactions for Ethereum decreased by
3%.
As transaction volume on Ethereum has decreased, network fees have also dropped significantly. According to data providers, they decreased by 43% during this period.
The decrease in Ethereum's daily transactions indicates a reduction in network activity and usage. Decreased demand for this network can negatively impact the price of ETH, which has been observed over the past few days.
The 3% decline in ETH's value over the past 24 hours reflects the general market downturn, but the decrease in Ethereum network user activity also plays a role. This directly impacts the demand for major altcoins.
ETH Price Forecast: Why Network Activity Needs to Improve
Ethereum is currently trading at $2,619, just above the crucial support level of $2,579. If market activity further slows and altcoin demand weakens, the bulls may struggle to maintain this support. In this scenario, Ethereum's price could drop to the next major support level of $2,264.
Read more: How to Buy Ethereum (ETH) and Everything You Need to Know
On the other hand, if Ethereum's network activity increases, it could lead to higher altcoin demand and have a positive impact on the price. In this case, Ethereum's price could rebound and rise to $3,336.
