Ethereum’s on-chain activity is buzzing with excitement as it reaches yearly highs, driven by a surge in active addresses and the ongoing effects of EIP-1559. This uptick in activity—recorded at a staggering 674,000 active addresses—coincides with a tightening supply, sparking discussions about Ethereum’s price prospects as it hovers around crucial support zones.
On-Chain Activity Surge
Ethereum, the world’s second-largest cryptocurrency by market capitalization, is witnessing a remarkable increase in on-chain activity. With 674,000 active addresses, the network is experiencing its highest level of engagement this year. This surge is largely attributed to the implementation of EIP-1559, an upgrade that introduced a burning mechanism reducing the supply of ETH. As more ETH gets removed from circulation, the scarcity effect is kicking in—potentially setting the stage for price movements.
Here’s the catch: analysts are now closely monitoring Ethereum’s support levels, eyeing a potential rally to $4,000 if these zones hold firm. “The dynamics at play are fascinating,” comments blockchain analyst Sarah Thompson. “With supply constraints tightening due to EIP-1559, we’re observing a classic supply-demand scenario that could propel prices upward, assuming market conditions remain favorable.” As explored in Ethereum Defies Bitcoin Slump as Analysts See Path to $5,000, some experts believe Ethereum could surpass even higher price targets if current trends continue.
The Impact of EIP-1559
Introduced as part of the London hard fork in August 2021, EIP-1559 reformed Ethereum’s transaction fee model, making it more predictable and user-friendly by burning a portion of the transaction fees. Fast forward to 2025, and the cumulative effect of this burning mechanism is becoming evident—ETH’s supply is decreasing at a noticeable rate.
“The real genius behind EIP-1559 is its dual impact,” notes DeFi strategist Mark Leland. “Not only does it make transaction fees more manageable, but it also creates a deflationary pressure on ETH’s supply. This pressure is what’s currently energizing the market.”
Yet, there’s a layer of uncertainty. While the deflationary aspect of EIP-1559 seems promising, the crypto market is known for its volatility. The question remains: can Ethereum maintain its bullish momentum amid broader market fluctuations?
Price Speculations and Market Sentiment
The conversation around Ethereum is not just about numbers; it’s about sentiment. With the crypto community buzzing over the potential $4,000 price target, there’s a palpable sense of anticipation. However, the path to this price level isn’t without its hurdles. Regulatory changes, macroeconomic factors, and Bitcoin’s price movements all play a role in shaping Ethereum’s trajectory. For a broader perspective on Ethereum’s role in the crypto ecosystem, see Ethereum activity may top 2024 as it stays key to DeFi, NFTs: DappRadar.
Ethereum’s journey is a microcosm of the broader crypto market—volatile yet full of potential. As we move through 2025, the Ethereum community remains hopeful, yet cautious. Are we on the brink of a new rally, or will external factors temper the current optimism?
Looking Ahead
The Ethereum ecosystem is evolving at a rapid pace, with upgrades like the Merge and the transition to proof-of-stake continuing to attract attention. These developments could further influence Ethereum’s supply dynamics and price movements in the coming months.
While the current surge in on-chain activity and the effects of EIP-1559 are undeniably significant, the crypto world knows better than to predict with certainty. As Ethereum navigates these uncharted waters, the community remains vigilant—watching, waiting, and ready to adapt to whatever the future holds.
Source
This article is based on: ETH Supply Tightens as On-Chain Activity Hits Yearly Highs
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
