Yuriko Nakao
Ether overtook bitcoin in the number of active addresses on its network on Friday, a sign that demand is faltering for the world’s biggest cryptocurrency as its counterpart gains in stature.
Data from Bitinfocharts shows ethereum in the lead with 757,859 active addresses, around 49,154 more than bitcoin, which has 708,705. The total number of active addresses on the bitcoin network has dropped 38% from its April peak of 1.1 million.
bitinfocharts.com
There could be a variety of reasons behind bitcoin’s decline, Justin d’Anethan, head of sales at crypto-trading firm Eqonex, told Insider. These include the huge sell-off in the cryptocurrency in May and the reduction in hashing power of bitcoin miners from China’s mining crackdown, he noted.
“This, coupled with the rise of ethereum and its utility, would have contributed to ethereum overtaking bitcoin in terms of the number of active addresses,” d’Anethan said.
The Chinese ban is estimated to have closed more than 90% of bitcoin mining operations. Ether production was also hit, but any impact is seen as mitigated by the coming 2022 upgrade to ethereum 2.0, which does not require mining.
The slide in active addresses is a sign that demand for bitcoin is fading quickly, as more people sell the cryptocurrency. At the same time, traders may be waiting to buy the dip. That’s a bearish trend for the cryptocurrency’s price, some market commentators said.
The price of bitcoin has fallen around 50% since its mid-April peak of $64,829, trading at around $33,482 on Friday morning. Over the same period, the ether token ether has declined by 11% to around $2,039, and is down more than 50% on its own record high of $4,380 in May.
Some experts see ethereum as poised to break out, given the ease of use of its token and the flexibility of the technology underpinning the network. The decentralized platform is also being used for “smart contracts” and applications that are therefor hard to tamper with.
“Ethereum is and always has been the platform of choice for building smart contracts, due to the maturity of its ecosystem. To this end, ethereum has been the platform of choice for building decentralized applications upon,” d’Anethan said.
The range of decentralized finance, or DeFi, apps runs from savings, lending, trading, asset management, and insurance, to creative media like art and music with NFTs, to gaming worlds and their collectibles
There has been a high rate of adoption of such decentralized finance, or DeFi, applications by companies such as Compound, UniSwap and SushiSwap, d’Anethan noted. These apps are typically built on ethereum, so this has pushed up the number of its active addresses, he explained.
“Ethereum addresses empower people to be an economic agent in a digital world,” Lex Sokolin, a head economist at blockchain company ConsenSys, told Insider.