For nearly all of Ethereum's history its price has correlated strongly positively with the trend in active addresses.
Since EIP-1559 ๐ฅ came to effect, the price of ETH keeps rising but the correlation with aa's has weakened significantly.
Let's take a closer look ๐
Since EIP-1559 ๐ฅ came to effect, the price of ETH keeps rising but the correlation with aa's has weakened significantly.
Let's take a closer look ๐
1/ What the chart above hints towards, becomes crystal clear when you run the numbers.
Up to August 2021 the correlation between price and aa's stood at an average of approx. 80%.
It has since flipped to a negative 32% ๐คฏ
Up to August 2021 the correlation between price and aa's stood at an average of approx. 80%.
It has since flipped to a negative 32% ๐คฏ
2/ But why is this the case? Well for one EIP-1559 has introduced a burning mechanism to the economics of ETH.
The first-price auction mechanism is out the window and instead we now have a basefee + priority fee mechanism instead.
The basefee is what gets burned.
The first-price auction mechanism is out the window and instead we now have a basefee + priority fee mechanism instead.
The basefee is what gets burned.
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