The recent fall in ethereum’s price appears to have led to a divergence from its usual correlation with transaction numbers and other network usage statistics.
For much of 2017 and 2018 they moved in tandem, with a significant divergence seen during the recent low in April.
That, however, pales in comparison to the current gap between price and transaction numbers, which is the biggest ever.
The above chart, artisaned by Trustnodes while the data is provided by Bitinfocharts, has price as the dotted line, while transactions are in full green.
That makes it slightly difficult to see the difference as Bitinforcharts doesn’t use different colors, but a significant gap can still be seen especially recently.
That might suggest sentiment has perhaps overshot, with the assumption here being that network usage corresponds to the level of growth. That, in turn, can be taken as a proxy for the level of demand.
Usually, thus, usage and price corresponds, but at times price can overshoot, as in May 2017 which can just about be seen in the chart, or undershoot as in April 2018 and as far more significantly during the past few days.
The predictive power of this metric is unknown primarily because it is an assumption with the transaction data themselves potentially easily manipulatable especially when fees are at one cent as currently for eth.
A better chart, thus, might be the amount of eth moved, but that too tells a somewhat similar story as data from Santiment shows:
As can be seen there, around March the number of eth transferred daily stabilizes at around ◊2 million. The same can be said for transactions at around circa 700,000 a day.
That is far more than the last time price was at these levels in 2017, with transactions back then at around 250,000.
Suggesting there has been at least 3x growth since, but price isn’t quite reflecting it, at least for now. Whether it eventually will, remains to be seen. For bitcoin it always did, until capacity was capped.