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Ethereum is showing signs of bearish divergence, with demand weakening even as prices briefly rose to $1,832.
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Amid shrinking gas usage and a notable exit by a major whale, concerns about Ethereum’s sustained growth are mounting.
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A COINOTAG report indicates a significant drop in daily active addresses (DAA), plunging to -50%, highlighting weak user growth.
Ethereum’s price rebounds to $1,832, but falling gas usage and user activity raise concerns about its future strength.
Is Ethereum losing steam?
After hovering near 20 billion in gas usage since early February, Ethereum now faces a sharp drop back to **11.68 billion**. This **decline** indicates a slowdown in on-chain activity, raising alarms about reduced demand across **DeFi**, **NFT**, and other decentralized applications (dApps). Historically, a decrease in gas usage correlates with stagnation or bearish trends, especially in the absence of new user growth, weakening **bullish** arguments for ETH’s current price levels.
Source: Santiment
Additional data reveals a **7.99%** decline in mid-tier holders over the past month, contrasted by a **1.33%** increase in retail wallets and a **2.26%** rise in whale holdings. This trend suggests medium-sized investors are reducing their exposure amid uncertain conditions, while retail optimism remains relatively strong. However, the growing number of retail wallets alone may not provide the momentum needed for a sustained price rally, especially when weighed against profit-taking activities like those observed with the whale’s recent Kraken deposit.
Set up for a deeper correction?
Transaction activity has illustrated a stark decline across high-value brackets, with transfers above **$10 million** down **83%** and those between **$1 million** and **$10 million** decreasing by nearly **70%**. This downturn hints at waning institutional interest or a more cautious posture from large investors. Typically, significant transaction counts are associated with market-moving activity; thus, their decrease could signal reduced volatility in the near term alongside diminished upward momentum for ETH.
Source: IntoTheBlock
Ethereums price, at press time, hovers just above critical long liquidation clusters at **$1,815**. A drop below this level could incite cascading liquidations, thereby amplifying downside risks. Yet, short positions remain clustered above **$1,850**, creating potential for a short squeeze should buyers gain traction. This ongoing struggle between leveraged longs and shorts sets the stage for an imminent volatile breakout or breakdown in future sessions.
User activity fades
The bearish divergence highlighted by Santiment’s price-to-DAA metric shows a profound decline of nearly **-50%**, indicating a drop in user growth in relation to recent price trends. This significant divergence suggests that ETH’s price surges are not being supported by new address activity—often signaling a bearish market condition. Historical patterns suggest that such disconnects are precursors to sell-offs, especially when combined with fundamental weaknesses such as diminished gas usage.
Source: Santiment
Ultimately, despite the temporary price surge, Ethereum’s fundamentals are increasingly concerning. Diminishing gas usage, declining high-value transactions, and user activity showing a stark bearish divergence contribute to a precarious outlook. The interplay of liquidation clusters and shifts in investor demographics further applies pressure on an already delicate situation. Unless new demand emerges, Ethereum may struggle to maintain the $1,832 threshold amidst growing bearish indicators.
