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

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

ETH/BTC price on Binance, 2021 Source: TradingView
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Despite bitcoin hovering in a tight range two weeks before the 0.082 ETH/BTC peak, this period marked the peak of the “DeFi summer” when Ethereum’s total locked-in value (TVL) soared to $93 billion from $42 billion two months earlier. .

What is behind the low Ethereum performance in 2021?

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Before jumping to conclusions, a broader set of data is needed to understand what led to the 31% ETH/BTC price correction in 2021. For starters, it’s a good idea to look 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 increased from 595,620 in mid-March to 857,520 in mid-May. So it wasn’t just the growth of TVL that took investors by surprise, but the number of users as well.

Ethereum’s 31% lagging behind Bitcoin in June 2021 reflected a period of cooling following the unprecedented growth of the Ethereum ecosystem. The effects on the price of Ether have been devastating, and this “DeFi summer” has been followed by a 56% correction.

Ether/USD Price on Coinbase, 2021 Source: TradingView

You need to compare the latest data to understand if the ether is moving towards a similar result. In that sense, those who were waiting for a 31% drop from the price of Bitcoin bought the altcoin at a cyclical low around $1,800 on June 27, 2021, and the price rose 83% in 50 days.

Is Ether giving a buy signal right now?

There is no DeFi Summer this time, and before the 33% negative performance against Bitcoin this year, the active address indicator was already slightly bearish.

Daily active Ethereum network addresses, 7-day average. Source: CoinMetrics

By May 10, 2022, Ethereum had 563,160 active addresses, down from the last couple of months. This is the exact opposite of the mid-2021 move that occurred when the price of Ether accelerated its losses in BTC.

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

The total locked value of the Ethereum network, USD. Source: Defillama

The data shows that there were $87 billion in deposits on the Ethereum TVL network on May 10, 2022, up from $102 billion a month earlier. Therefore, there is no correlation between the mid-2021 cooling after the “DeFi summer” and the current 33% drop in Ethereum prices versus BTC.

These numbers don’t show similarities between the two periods, but $1,200 could also be a cycle low, and it will depend on factors other than network usage.

Given how weak active addresses and TVL data were prior to the recent price correction, investors should be especially careful when trying to predict a market bottom.

The views and opinions expressed here are solely those of author and do not necessarily represent the views of Cryptooshala. Every investment and trading move involves risk. You should do your own research when making a decision.