On-chain data reveals a record surge in new Ethereum addresses, a signal historically associated with market tops, while technical analysis indicates both Bitcoin and Ethereum are in overbought territory, prompting warnings of a potential price correction.
Ethereum's network experienced a rapid and record growth in new addresses as of January 7, according to analytics firm Santiment. On-chain analyst Maksim from Santiment noted, "The Ethereum network saw a massive surge in new addresses… historic spikes like this often happen right before a severe correction as they signal peak excitement." This phenomenon has significant implications for Ethereum and related Layer-2 (L2) token markets, with analysts urging caution.
Concurrently, exchange analysis from Binance shows both Bitcoin (BTC) and Ethereum (ETH) are overbought. Bitcoin has been trading around $93,000 with a high Relative Strength Index (RSI), facing resistance between $94,000 and $95,000. Ethereum is trading near $3,250, with the $3,300 level identified as a key resistance point. A Binance analyst commented on ETH, stating, "The $3,300 level forms a key resistance."
The combination of these factors highlights vulnerability to price corrections. Historically, similar setups with high RSI and heavy call option interest have led to 10–20% retracements. Experts predict a possible price drop for ETH into the $2,600-$2,800 range if it fails to break resistance. The situation is compounded by crowded call options, which BitMEX co-founder Arthur Hayes noted can lead to leverage being wiped when "everyone is long calls into a round number."
Analysts emphasize that these dynamics could impact valuations of ETH, SOL, and major L2 ecosystem tokens like Arbitrum and Polygon, as many share direct economic ties with Ethereum's mainnet. The shifting dynamics may prompt capital flows toward less extended altcoins.
