Here is why Ethereum (eth) continues to bleed, according to Cryptoquant

The last months have been difficult for the Ethereum ecosystem, with Ethher (ETH) falling to levels not seen since 2020. EHH has a significantly lower performance compared to Bitcoin (BTC) and some important capitalization altcoins. Worse, bleeding does not seem to stop soon.

According to a report According to the Cryptoquant market analysis platform, the decreased Red activity is one of the main reasons why Ethereum has been losing value. This continuous modern activity is contributing to a high inflation rate for ETH, which causes cryptocurrency to lose its value over time.

Decreasing network activity

The number of active addresses in Ethereum has been constantly reduced since the beginning of the year. In addition, the average transaction and block rates have collapsed to register minimums. As a result of low rates and less active addresses, the ETH burns rate has fallen to its lowest level from the merger.

Remember that Ethereum introduced a burning mechanism to eliminate a portion of ETH from the circulation to ensure that the asset remained deflation over time. These currencies are taken from Ethereum gas rates and permanently eliminated the supply.

The fusion, which marked the transition of Ethereum of a test of work (POW) to a mechanism of consensus of testing test (POS), aimed to strengthen this concept ensuring that more Eth was burned than produced.

However, after the Dencun update last year, which introduced Blobs and reduced the transaction rates, he burned less ETH and coined more. This caused the ether to become inflationary again. With the ETH burns rate around its lowest level from the merger, inflationary pressures on cryptocurrency have intensified.

“Ethereum’s recent low performance can be attributed largely to the activity of the diminished network, as demonstrated by the decrease in active addresses and reduced transaction rates. These factors, together with a low -rate burn rate after the update and a continuous continuous inflation rate, continue to exert down pressure on the value of the asset of the pseudonyms.

Eth below 4% daily

In addition, Egyhash declared that Ethereum faces a possibility of potential recovery if there is a positive change in network activity, an increase in active addresses, which would lead to higher transaction rates and burn more ETH.

At the time of writing, ETH was worth $ 1,790, 4% less daily due to Coinmarketcap data. In particular, the asset was negatively affected by the announcement confirming the implementation of commercial tariffs in the United States.

In addition, Ether has lost 16% of its value in the last month and has decreased by more than 60% since this cycle reaches a maximum point of just over $ 4,000.