What can we expect from ETH in April?

Ethereum (ETH) has gone through a challenging month in March, clearly reflected by a series of downward trends that mirror the overall market downturn.

However, as the market begins to show signs of recovery, the main question for April remains: Can ETH regain its upward momentum?

ETH March: Price Collapse, Decreased Activity, and Increased Supply Pressure

On March 11, ETH fell to a two-year low of $1,759. This development prompted traders to “buy the dip,” triggering a price increase to $2,104 on March 24.

However, market participants continued to take profits afterward, pushing prices down for the rest of the month. On March 31, ETH closed below the important level of $2,000 at $1,822.

In the context of ETH prices facing difficulties, activity on the Ethereum network also plummeted significantly in March. According to Artemis, the number of active addresses completing at least one ETH transaction daily dropped by 20% this month.

As a result, the monthly transaction volume of the network has also decreased significantly, down to only 1.06 million during the 31-day period under consideration (-21%).

Ethereum Network Activity | Source: ArtemisIn general, as more users trade and participate in Ethereum, the burn rate (measures the number of ETH tokens permanently removed from circulation) will increase, contributing to the deflationary pressure on ETH supply. However, when user activity decreases, the ETH burn rate will decline, leaving more coins in circulation and increasing the circulating supply.

This is the case of ETH in March when the circulating supply surged. According to data from Ultrasound Money, 74,322 coins have been added to the circulating supply of ETH in the past 30 days.

Circulating supply of ETH | Source: Ultrasound MoneyTypically, when the supply of an asset increases sharply like this without corresponding demand to absorb it, it will increase downward pressure. This puts ETH at risk of prolonging the downtrend into April.

What’s next for ETH**?**

In an interview, research analyst Gabriel Halm at IntoTheBlock noted that the current inflation trend of ETH “may not be a major warning sign” to pay attention to in April.

Halm said:

“Although the supply of ETH has recently stopped deflating, the annual inflation rate was only 0.73% last month, significantly lower than the pre-The Merge level and lower than Bitcoin. For investors, this moderate level of inflation may not be a major warning sign, as long as network usage, developer activity, and institutional adoption remain strong.”

Furthermore, regarding whether the declining network activity of Ethereum plays a significant role in the recent price struggle, Halm believes its impact may be exaggerated.

“Historically, from September 2022 to early 2024, the supply of ETH has been deflationary, yet the ETH/BTC pair has shown a downward trend. This indicates that macroeconomic forces and the broader market may play a much more significant role than just the changes in token supply.”

Comparison of market capitalization ETH/BTC | Source: IntoTheBlockRegarding what ETH holders should expect this month, Halm noted:

“Ultimately, whether ETH rises or falls in April may depend more on market sentiment and macro trends than on short-term supply dynamics. However, it is essential to monitor developments in the network that could drive new activity and reinforce ETH’s leading position in the broader cryptocurrency landscape.”

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do thorough research before making decisions. We are not responsible for your investment decisions.

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