With Bitcoin stealing most of the market’s attention, Ethereum, as the top altcoin, has fallen out of the picture since it launched in the fourth quarter. On the price front, BTC’s growth has increased market anticipation, while Ethereum has taken an underdog approach, the development side of which looks pretty much alive.

Demand for Ethereum is making a comeback

After a massive surge in Layer 2 protocols towards the end of the third quarter, demand for Ethereum blockspace appeared to have recovered early in the last quarter of the year. In particular, Ethereum’s transaction fees topped $ 1 billion in September with an average transaction fee of $ 28.

After EIP-1559 went live, a staggering 55% net reduction in ETH emission was noted, with over 474,000 ETH ($ 1.7 billion) burned. This in turn made way for a supply shock narrative that was optimistic about the long-term development of ETH.

Source: SpencerNoon

However, as analyst SpencerNoon noted, Ethereum’s persistently high fees hampered the user experience and served as a tailwind for greater user adoption of cheaper L2s and alternative L1s.

This could be one reason active addresses on Ethereum were close to 577K, which has fallen nearly 25% since the highs in May. Nonetheless, a booming NFT market indirectly enabled a more robust Ethereum ecosystem alongside Defi’s growth in the last quarter.

Healthy HODLing behavior

Ethereum HODL waves help track how actively the current ETH offering is based on the last move in the chain. It is noteworthy that 76% of the offer has not moved for more than six months and about 46% of the offer is in age groups of more than one year.

ETH HODL waves | Source: Glassnode

The most important factors affecting the HODL waves include the dominance of ETH in Defi, the staking of Ethereum and the ETH reserves of the CEX in cold storage. One worrying factor, however, was that $ 306 million worth of ETH was deposited on exchanges, compared with $ 750 million withdrawn last week.

Looking at the increasing foreign exchange inflows, it appeared that the pressure on the sell side, which has to be absorbed around the price resistance level, could increase.

Development looks alive

Data scientist Daren Matsuoka specified that the Ethereum developer community is “more alive than ever”. In fact, more developers have entered the Ethereum ecosystem so far this year than in the previous two years combined.

Source: Daren Matsuoka

Ethereum’s developer activity growth was analyzed by looking at the GitHub stars in major developer repositories such as web3js, truffle, solidity, hardhat, ethersjs, OpenZeppelin contracts, web3py and scaffold-eth over time.

Remarkably, there were now over 39,000 Github accounts that contained at least one of the major repositories. With increasing development activity and increasing demand for the Ethereum network, the future of ETH looked rather bright.

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