Ethereum's Price Drops 15% in March Amid 21% Decline in Transactions

Coin WorldThursday, Apr 3, 2025 1:47 pm ET
2min read

Ethereum, the leading altcoin, faced significant challenges in March, marked by a series of bearish trends that reflected a broader market slowdown. The month began with a sharp decline on March 11, when Ethereum plummeted to a two-year low of $1,759. This drop prompted traders to "buy the dip," leading to a rally that peaked at $2,104 by March 24. However, market participants resumed profit-taking, causing the coin’s price to fall sharply for the rest of the month. On March 31, ETH closed below the critical $2,000 price level at $1,822.

Amid these price troubles, the Ethereum network also experienced a severe decline in activity. The daily count of active addresses that completed at least one ETH transaction fell by 20% in March. Consequently, the network’s monthly transaction count also plummeted, totaling 1.06 million during the 31-day period, a 21% decrease from the previous month. Generally, as more users transact and engage with Ethereum, the burn rate increases, contributing to Ether’s deflationary supply dynamic. However, when user activity drops, ETH’s burn rate reduces, leaving many coins in circulation and adding to its circulating supply. This was the case for ETH in March when it saw a spike in its circulating supply, with 74,322.37 coins added to ETH’s circulating supply in the past 30 days. Usually, when an asset’s supply spikes like this without a corresponding demand to absorb it, it increases the downward pressure on its price. This puts ETH at risk of extending its decline in April.

In an exclusive interview, Gabriel Halm, a Research Analyst at IntoTheBlock, noted that ETH’s current inflationary trends “may not be a major red flag” to watch out for in April. Halm explained that even though Ethereum’s supply has recently stopped being deflationary, its annualized inflation rate is still only 0.73% over the last month, which is dramatically lower than pre-Merge levels and lower than that of Bitcoin. For investors, this moderate level of inflation may not be a major red flag, provided that network usage, developer activity, and institutional adoption remain robust. Halm also suggested that the impact of Ethereum’s declining network activity on its recent price struggles may be overstated. Historically, from September 2022 to early 2024, Ethereum’s supply remained deflationary, yet the ETH/BTC pair still trended lower. This suggests that macroeconomic and broader market forces can play a far more significant role than token supply changes alone.

On what ETH holders should anticipate this month, Halm said that whether Ethereum dips or rallies in April will likely depend more on market sentiment and macro trends than on its short-term supply dynamics. Still, it’s essential to keep an eye on network developments that could spur renewed activity and reinforce ETH’s leading position in the broader crypto landscape.