Fred Wilson, co-founder of Union Ventures Fund, believes Ethereum [ETH] has the potential to grow this year. In a statement on 3 January, Fred predicted that even if many web3 projects failed in 2023, Ethereum would still grow.
This bullish sentiment stemmed from Fred’s belief that Ethereum had the best underlying economic model of any web3 asset. Other factors contributed to investors’ enthusiasm for ETH.
One of them would be the growing number of Ethereum addresses. According to Glassnode data, the number of non-zero addresses has increased significantly in recent months, reaching an all-time high of 92 million addresses.
Along with the addresses, the Ethereum network’s validators expanded. Over the last month, the network’s validators increased by 2.22%. Furthermore, in the last seven days, the revenue generated by these validators increased by 1.65%.
At the time of writing, there were 494,342 validators on the Ethereum network.
The validators were not the only ones who believed in Ethereum; traders were also bullish on the currency.
According to Coinglass data, the number of long positions in favour of Ethereum far outnumbered the number of short positions. Traders held 65.82% of long positions at the time of publication.
Despite the fact that the overall sentiment for Ethereum appears to be positive, there are a few areas where Ethereum could improve.
For example, Ethereum development activity has dropped dramatically in the last month. This meant that Ethereum’s team’s contributions to its GitHub page had decreased.
The decline in development activity, however, did not deter Ethereum whales. Over the last two weeks, the percentage of Ethereum held by large addresses has skyrocketed. However, this interest from whales was insufficient to positively impact ETH’s price.
As the price fell, so did the Market Value to Realized Value (MVRV) ratio. This meant that the majority of Ethereum holders would lose money if they sold their holdings. The negative long/short difference indicated that most short-term investors would suffer a loss.
It remains to be seen whether short-term investors will sell their positions. ETH was trading at $1,216.88 at the time of writing. According to CoinMarketCap, its price has dropped by 0.66% in the last 24 hours.