Ethereum (ETH) wallets are still essential, and growing at a faster pace compared to Bitcoin (BTC). Despite the leading position of BTC, wallets holding ETH remain essential to access multiple apps.
The growth of Ethereum (ETH) wallets has taken a different trajectory from the rate of Bitcoin (BTC) wallet creation. The main reason behind the difference in growth rate is the role that ETH wallets play in interacting with available apps.
Unique Ethereum addresses increased by 2% in the past month, maintaining its usual growth rate. Over the last four weeks, Ethereum wallets have increased from 278.8M to 281.7M.
The rate of change for Bitcoin was slower, as the creation of new wallets with non-zero balances slowed down. In the past month, the number of wallets increased by 1% from 53.9M to 54.1M. Active Bitcoin addresses also showed reduced usage, falling to around 500K per day. Some of the most recent activity on the Bitcoin network seems to be related to whales re-establishing their dominance, with a lack of new retail interest.
The slowdown in using Ordinals and Runes also saw small-scale retail users abandon Bitcoin. Inscriptions on the chain also slowed down, leaving most of the block space for ordinary BTC transfers.
Ethereum growth comes from stablecoin usage
Santiment research showed some of the new wallet creation comes from addresses holding Tether (USDT). In the past week alone, wallets with non-zero USDT balances increased from 5.91M to 5.98M. In the past three months, metrics by Sentiment Pro show Tether holders grew by 4%.
USDT is growing in popularity as a highly liquid resource to rejoin the market at a better moment. Even as more stablecoins are created, USDT retains its pole position because it is seen as a major source of potential liquidity, with more still USDT tokens waiting on the sidelines, yet to be in circulation. The Ethereum network also carries USDC, another fast-growing stablecoin used for payments or trading.
One of the markers of Tether’s growth is the rise in weekly fees. In the past seven days, Tether drew in more than $93M in fees, far outpacing Ethereum’s $7.3M reported.
The current tracking of Ethereum aims to resolve whether the network is still used, and which are the busiest apps. Even at the current usage rate, Ethereum still hosts more than 330K daily active wallets, with no signs of a rapid slowdown.
The other reason for the growing number of USDT holders is the possibility of passive income through DeFi protocols.
Notably, the growth of ETH-holding wallets has been uneven, with days of rapid expansion, especially around token launches.
Will the ETH price slide stop?
Despite being indispensable as a utility asset, ETH once again dipped on the open market. The latest Bitcoin (BTC) correction also brought ETH down under $2,400.
Bearish predictions have ETH going below $2,000 in the short term, before seeing renewed buying. The current price slide is approaching the long-term support for ETH at $2,200, with some hoping for a bounce from that level.
ETH sentiment from the latest trading pattern shows crowd money is bearish, while smart money is cautiously bullish.
In the short term, ETH price is still under pressure as Grayscale once again hemorrhaged more than 20K ETH, while only Fidelity’s ETF bought 1.93K ETH. ETH ETFs have endured persistent net outflows since they launched, as Grayscale divested its older wallets acquired at prices as low as $200 per ETH.
Ethereum flows continue to fuel L2
The growth of ETH-holding wallets and the usage of more USDT addresses are also tied to the demand for bridging. Ethereum is still the hub for several major L2, where both tokens and large sums of USDT flow in.
Stablecoins account for more than 26% of the traffic between Ethereum and Arbitrum, and more than 48% in the Ethereum-Polygon bridge. Based on total data, Ethereum has supplied more than $7B in liquidity, or a net 1.3B remaining in the protocols.
Bridging accounts for $2.9B in funds moving between Ethereum and other chains, with both inflows and outflows from L2s.
At the moment, most L2s try to use Ethereum as a relatively cheap resource, by paying the minimum possible fees for block space. Base leads this trend, paying the lowest possible fees with the highest revenues. Others, like ZKSync, rarely post their transactions to the Ethereum mainnet. Only Taiko sacrifices earnings for speed and posts comparatively more often on the Ethereum mainnet.
Cryptopolitan reporting by Hristina Vasileva
