ETH price stalled at $1,100, but some data suggests the altcoin sell-off is far from over.

Ether (ETH) price plunged below $1,100 early on June 14 at prices not seen since January 2021. The move down marks a 78 percent correction from the all-time high of $4,870 set on November 10, 2021.

More importantly, between May 10 and June 14, 2022, Ethereum underperformed Bitcoin (BTC) by 33%, with the last such event occurring in mid-2021.

ETH/BTC price on Binance, 2021 Source: TradingView
Although bitcoin was range-bound two weeks before peaking at 0.082 ETH/BTC, this period marked the peak of “DeFi summer” as the total value of the Ethereum network (TVL) went from $42 billion to $93 billion in two months dollar rose . so far.

What’s Behind Ethereum’s Low Performance in 2021?
Before jumping to any conclusions, a broader dataset is needed to understand what led to the 31% ETH/BTC price correction in 2021. It’s a good idea to start by looking at the number of active addresses.

Daily active Ethereum network addresses, 7-day average. Source: CoinMetrics
The data shows a steady increase in active addresses, which rose from 595,620 in mid-March to 857,520 in mid-May. So, the growth of TVL surprised not only investors, but also the number of users.

Ethereum’s 31% lag behind Bitcoin in June 2021 reflected a period of cooling following the unprecedented growth of the Ethereum ecosystem. The impact on Ether’s price has been devastating, and this summer saw a 56% correction in DeFi.

Ether/USD price on Coinbase, 2021 Source: TradingView
We need to compare the latest data to understand if the ether is heading towards a similar outcome. With that in mind, those waiting for a 31% drop in Bitcoin price bought the altcoin on June 27, 2021 at a cyclical low of around $1,800 and the price surged 83% in 50 days.

Is Ether giving a buy signal right now?
There is no DeFi summer this time, and before this year’s negative performance of 33% against Bitcoin, the active address indicator was already slightly down.

Daily active Ethereum network addresses, 7-day average. Source: CoinMetrics
As of May 10, 2022, Ethereum had 563,160 active addresses, fewer than in recent months. This is the polar opposite of the mid-2021 move that took place when Ether’s price accelerated its losses on BTC.

One can still think that despite the relatively stable number of users, the Ethereum network has grown, which represents a higher TVL.

The total locked value of the Ethereum network, USD. Source: Defillama
Data shows that as of May 10, 2022, there were $87 billion in deposits on the Ethereum TVL network, up from $102 billion a month earlier. So there is no correlation between the mid-2021 cooldown after the DeFi summer and the current 33% drop in Ethereum prices versus BTC.

These numbers show no similarities between the two periods, but $1,200 could also be a cycle bottom and it will depend on factors other than network usage.

With active addresses and TVL data weak ahead of the recent price correction, investors should exercise extra caution when attempting to predict a market bottom.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You should do your own research when making a decision.

Source: CoinTelegraph