Ethereum prices may be strong, and bulls are looking to push the coin towards $1,700, but on-chain data indicates lower activity from developers based on the number of new smart contracts posted in the first three weeks of January.
The number of smart contracts deployed when Ethereum fell
The number of new smart contracts deployed over the past few weeks, since the beginning of 2023 He fell by more than half. The number of new smart contracts deployed on January 1, 2023 reached 139,699 contracts.
However, a total of 56,370 smart contracts were deployed on Ethereum on January 23, which is a strong rebound from the 10,079 recorded on January 14, but still far from the levels of January 1.
The contraction over the past three weeks represents a 60% drop from January 1 levels, which has analysts worried. Typically, the number of contracts deployed on a smart contract network indicates on-chain activity, and the more dApps there are on any boundaries, in DeFi, NFTs, games, and more, the more likely that activity will spill over into the price action since ETH, the native token of Ethereum, Used to settle network fees.
When there is a surge of on-chain activity, the demand for block space is higher, which requires developers to use more ETH to slot in the block.
The futures posting coincides with the exemplary performance of the Ethereum price throughout the month. ETH price increased from $1,200 on January 1 to $1,659 on January 20. Although the bulls have not yet pushed the coin above $1,700, the immediate resistance level, if broken, could see Ethereum prices float to new highs in the first quarter of 2023.
History shows a direct correlation between the number of contracts posted and price movement since developers often double down whenever prices are trending higher, posting more contracts. This trend in performance from early January has not yet been validated, considering the difference between spot prices and the number of contracts launched.
Although there was a rally of nearly 5X between January 14th and January 23rd, there could be a lot more contracts if this action is in line with ETH prices.
However, smart contracts on the Ethereum network have seen strong growth in 2022. a Report By software company, Alchemy, it shows that more than 100,000 dApps will be launched in 2022.
Lower transaction fees
Average transaction fees on Ethereum have been on the rise since the start of the year, according to data from Ethereum CryptoQuant. Starting January 1, the fee more than doubled, going from $2.92 to $3.99 on January 23.
While fees are relatively higher now than at the start of the year, they are multiples lower than they were in May 2022 when the average fee for posting a simple transfer was $22. Subsequently, the deployment of smart contracts, depending on their complexity, was higher than multiples.
Featured image from Canva, chart from TradingView