The Ethereum [ETH] network has seen a significant decline in network activity over the past few months, reflecting the state of DeFi amid weak demand.
Historically, Ethereum has shown strong network activity and participation in the DeFi ecosystem, especially during positive market conditions.
The market has been on a positive note over the past week, with the rate cut announcement acting as a catalyst.
Will this be enough to revive interest in Ethereum's DeFi landscape?
So far, the Ethereum network has seen some positive activity, which could indicate signs of recovery.
The total market capitalization of the network's stablecoins can provide insight into the situation.
Ethereum's total stablecoin market capitalization (blue) peaked at $82.154 billion in April and has been declining since.
It recently bottomed out at $78.20 billion in early August. Since then, it has recovered slightly to $83.84 billion at the time of writing.
Ethereum’s TVL (blue) has also fallen sharply since peaking at $66.91 billion in June, to a low of under $43 billion.
However, it has since recovered to $47.79 billion. The recent recovery could indicate a return of confidence in the Ethereum network.
Is Ethereum Out of the Troubles Yet?
Ethereum has seen a significant increase in network fees since mid-September. This is the second highest increase in the metric we have observed in the past 3 months. This confirms that the increase in fees is due to more active network activity.
This increase shows correlation with ETH’s recent price surge, while also matching the positive sentiment in the crypto market.
However, this may not be an accurate representation of the performance of Ethereum's DeFi ecosystem.
While the above findings show some improvement in the Ethereum ecosystem, there are still signs of poor performance.
The number of active Ethereum addresses remains close to yearly lows.
In other words, excitement about the network remains weak, despite the recent surge in activity.
This could negatively impact ETH price action. For example, whale and institutional sentiment remains somewhat bearish according to recent observations.
Analysis shows that the recent ETH surge has been driven largely by retail demand. This could also indicate that the recent rally may not last, especially if smart money remains bearish for longer.
It is also important to note that it may take weeks or even months for strong capital flows to return to the crypto market.
