During 2023, Ethereum Layer 2 sector, and more generally the entire blockchain infrastructure landscape, saw strong growth in terms of new non-price users.
The DeFi sector saw a 52% increase in activity this year, driven by the strong development of the L1 interoperability and scalability platform.
Indeed, Ethereum users seem to prefer decentralized finance over other NFT and gaming activities, with on-chain trend data clearly indicating the dominance of this sector as the first choice of individuals on the network3.
Meanwhile, the speculative cryptocurrency market continues to make headway, with ETH hitting $1,900 per unit overnight, only to pull back slightly this morning.
Compared to the beginning of the year, the price of the industry’s second most capitalized crypto has risen sharply, but will this be the case in 2024?
Will Ethereum’s technology be able to dominate and attract the next billion users?
All the answers in this article.
On-chain data in the Ethereum market and classification of user habits
On-chain data for 2023 shows that the Ethereum infrastructure and its entire ecosystem are booming.
The entire layer 2, bridging platforms and web3 services sector is growing rapidly, with a positive estimate of 149.28% of new users compared to the beginning of the year.
In particular, the niche that seems to attract the most attention is that of DeFi, which, as we will see later thanks to the metrics provided by Nansen, has achieved higher user traffic than other decentralized industries.
More specifically, we are starting to collect on-chain data by looking at the change in the number of active addresses on the Ethereum blockchain over the course of 2023.
As of October 2023, there are more than 300,000 entities that have successfully completed at least one transaction, such as transferring assets to another address.
This shows that despite two turbulent years consisting of price crashes of most cryptocurrencies, global crises and hack attacks on the largest DeFi infrastructure, there is still a user base working on Ethereum on a daily basis.
If we try to go deeper, thanks to Nansen’s custom queries, we can sample active users on Ethereum to understand their attitudes in 2023.
We classify the people involved as
DeFi users: addresses that used DEX, lending and yield farming platforms, opened positions with decentralized futures contracts, performed stablecoin payments, exploited yield optimizer or arbitrage protocols, etc. the metaverse, invest in NFT liquidity platforms, bet on GambleFi;Scaling solution enthusiasts: addresses that have used scaling solutions such as rollups, cross-chain interoperability platforms, bridges, sidechains and L2.
According to the data recorded by Ethereum’s various web3 applications, we can conclude that the majority of active users have made DeFi their primary choice in 2023.
About 92,000 addresses are classified as ‘DeFi users’, while only about 40,000 NT and scale substrates are generally preferred, according to a snapshot from October 12.
Since March, there has been a strong increase in scaling protocols, supported by the trend of Ethereum summaries and alleged airdrops for early adopters.
In contrast, the NFT niche has lost more than 50 percent of its on-chain assets over the past year.
Another way to analyze the regularity of Ethereum users is to look at the FIRST transaction made by NEW addresses in 2023.
Basically, all wallets that were funded by other entities in 2023 and executed a transaction within 7 days were analyzed.
Once again, DeFi appears to be the preferred choice of the crypto world degenerate, with most transactions flowing into this sector.
According to data from October 12, only 17% of new users used Ethereum scaling solutions as their first transaction, but this figure is at the beginning of the year.
On the other hand, transactions in the NFT market were less frequent, falling from 24% at the start of the year to 6% on 12 October.
DeFi confirmed its dominance by recording a significant increase in this measure, with data showing 66% at the start of the year and 76% on October 12th.
Ethereum (ETH) price analysis and predictions
As mentioned above, it is not only Ethereum’s chain data that will make supporters of the smart contract platform smile in 2023, but also the performance of the ETH price, which has increased by more than 50% in the last 10 months.
After starting the year just above $1,200 per unit, the Ethereum coin returned to the $2,000 area around April, then went through a light spread phase until the rally of the past three weeks.
Currently, the price of ETH remains firmly above the 50 EMA, suggesting another leg higher before the end of the year.
The RSI is rising on the weekly time frame and there is plenty of room for further upward movement.
The Super Trend Indicator, which has been very useful in predicting the beginning and end of previous bull/bear cycles, called for a buy around the middle of the year (remember this comes a little later than market logic).
If we compare the current phase with that of 2020, when the Supertrend indicated a buying opportunity with ETH at around $250, we can say that we expect at least 4 more months of crypto price increases.
Indicatively, 2024 should be a good year for Ethereum and its cryptocurrency. Next year we can expect the halving of Bitcoin, which is usually the market’s best stimulus, and probably the SEC’s approval of the first crypto spot ETF to be traded on US stock exchanges.
In addition, the Fed could also give a positive boost to the price of Ethereum, with US interest rate forecasts indicating a high probability of quantitative tightening in favor of economic expansion with reduced debt costs.
All in all, the price of ETH is likely to exceed at least $3,000 next year. Several analysts agree that it will surpass its previous record of $4,950.
Despite this, ETH is still suffering in the pair against BTC and is -25% since the beginning of the year.
This means that until now it has been cheaper to hold bitcoin than ethereum.
It will be interesting to see if this trend starts to reverse at the start of the new year, like during the last bull run in 2020.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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