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Ethereum faces a critical juncture as user activity plunges in 2025, raising urgent concerns about supply dynamics and its long-term price stability.
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As Ethereum’s network grapples with an evident decrease in transaction volume and wallet creation, its dominance in the blockchain space is increasingly questioned.
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“Without strong demand, the surplus supply is creating consistent downward pressure on ETH’s price,” notes a COINOTAG analyst.
Ethereum’s user activity has significantly declined in 2025, highlighting inflationary pressures and challenges to its long-term value proposition.
Ethereum’s on-chain metrics sink as network demand dwindles
Ethereum’s user engagement is under notable stress as crucial network metrics plummet to alarmingly low levels. Recent data reveals a stark trend: on March 16, the active addresses participating in ETH transactions saw a drop to 361,078—marking the lowest daily count of 2025.
This significant downturn signals a weakening demand for transactions on the blockchain, correlating closely with the reduction in gas fee generation that fuels Ethereum’s economic model.
Source: Glassnode
The decline in active usage further reduces the ETH burned through transaction fees, intensifying inflationary pressures on the asset. This shift in narration may gradually erode investor confidence.
Additionally, new wallet creation has witnessed a sharp decline, with only 86,539 new addresses established on a recent Sunday—the lowest figure for this year. This trend highlights a drop-off in speculative interest and an overall decrease in new participants within the Ethereum ecosystem.
Source: Glassnode
These concerning on-chain metrics collectively suggest a significant cooling of user appetite for Ethereum amidst growing inflation worries and competitive blockchain solutions gaining traction.
Impact on ETH’s supply
Amidst the decline in operational activity, Ethereum’s circulating supply is increasingly tilting towards inflation. Over the past month, the addition of more than 71,000 ETH to the circulating supply—equivalent to $135 million—has pushed the total circulating supply beyond 120 million ETH.
This reduction in transaction volume leads to fewer transaction fees being burned, thereby diminishing Ethereum’s overarching deflationary narrative. Without robust demand mechanisms to counter the uptick in new issuance, the subsequent oversupply places persistent downward pressure on ETH’s market price.
The ramifications of these developments are triggering alarm among investors concerning the future valuation of the Ethereum network.
Ethereum price outlook
As of the latest updates, Ethereum has been struggling to regain upward momentum, hovering around $1,894 after a 1.6% drop throughout the day. The Relative Strength Index (RSI) remains below 40, indicative of ongoing bearish sentiment and diminishing buying pressure, while the On-Balance Volume (OBV) has also witnessed a sharp decline, further affirming lackluster accumulation trends.
Source: TradingView
While the MACD indicator shows potential for a bullish crossover, it remains deeply entrenched in negative territory, suggesting that any attempted recovery may lack sustainability unless bolstered by heightened trading volumes. Since the early March sell-off, Ethereum’s price action has predominantly trended sideways, with brief moments of stability above the $1,850 mark.
Should bulls fail to reclaim the critical $2,000 threshold in the near term, Ethereum could confront further downward moves. Additionally, the combination of muted market sentiment and weak on-chain metrics may continue to exert pressure on its price trajectory.
Conclusion
Ethereum’s current challenges highlight significant vulnerabilities in its user engagement and supply dynamics. With sharp declines in user activity leading to inflationary pressures on the network, investors are increasingly concerned about the cryptocurrency’s long-term outlook. Without a robust resurgence in demand and confidence, Ethereum faces an uphill battle to stabilize its market price amidst rising competition and shifting user preferences.
