Rising active addresses, record-high daily transactions, and expanding stablecoin usage—supported by lower fees and layer-2 scaling—are strengthening Ethereum’s fundamentals and improving its near-term outlook. At the same time, broader crypto market sentiment has cooled after reaching a multi-month high, due to uncertainty around US crypto regulation.
Ethereum User Growth Accelerates
Ethereum’s on-chain activity is showing new momentum, driven by a surge in new users and a sharp improvement in how many of them are interacting with the network over time. According to data from Glassnode, month-over-month “activity retention” among new participants almost doubled.
This suggests that the recent growth is being fueled by fresh wallets rather than recycled activity from long-term users. Glassnode also pointed out that first-time interacting addresses spiked over the past 30 days.
The scale of this increase is quite impressive. New addresses engaging with the network climbed from just over four million to around eight million in a single month, which suggests that Ethereum is once again attracting users at a pace not seen recently. Activity retention, which measures whether users stay active rather than appearing briefly and leaving, strengthened alongside this growth, pointing to more durable usage rather than speculative bursts of activity.
Other network metrics reinforce this trend. Data from Etherscan shows that active addresses have more than doubled over the past year, rising from roughly 410,000 to over one million by mid-January. Daily transaction counts also surged, hitting a new all-time high of approximately 2.8 million transactions. This is an increase of about 125% compared with the same period last year.
Active Ethereum addresses over the past year (Source: Etherscan)
Milk Road attributes most of this activity to a rapid expansion in stablecoin usage at a time when transaction fees on Ethereum are falling. This trend has been enabled by Ethereum’s scaling roadmap, which shifts execution to layer-2 networks while maintaining secure settlement on the base layer. Lower fees and faster execution have made Ethereum a lot more practical for everyday transfers, payments, and decentralized finance activity.
Analysts are interpreting these developments as constructive for Ethereum’s outlook. Justin d’Anethan of Arctic Digital said in an interview that improving sentiment, recovering technical indicators, and renewed capital inflows into ETFs, stablecoins, and native protocols are creating conditions for higher prices.
ETH’s price action over the past 3 months (Source: CoinCodex)
Taken together, rising user retention, record transaction volumes, and strengthening institutional interest are reshaping Ethereum’s on-chain narrative. Michaël van de Poppe suggested that Ethereum is experiencing a period of compression that could resolve with a breakout in the near term.
Crypto Sentiment Slips
Although Ethereum’s momentum is picking up, crypto market sentiment has cooled after reaching a multi-month high, due to uncertainty around US crypto regulation. The Crypto Fear & Greed Index fell sharply, dropping to a neutral score of 49 out of 100 after briefly entering “greed” territory on Thursday. This reading of 61 was the index’s highest level in several months.
Crypto fear and greed index (Source: Alternative)
The spike in sentiment came alongside a strong move higher in Bitcoin, which gained roughly 5% on Thursday and briefly pushed toward the upper $97,000 range. That rally helped drive the Fear & Greed Index to its strongest level since early October, when optimism peaked just before a major market selloff and widespread liquidations. .
According to crypto analytics firm Santiment, Bitcoin’s recent rally appeared fundamentally supported, which points to continued accumulation by large, sophisticated investors while retail traders were selling into strength. This divergence suggested that the price move was not purely speculative, but rather underpinned by longer-term positioning. However, sentiment on social media and among industry leaders began to soften as concerns emerged over a Senate version of a long-anticipated US crypto market structure bill.
The goal of the proposed legislation is to clarify how digital assets will be regulated in the United States by dividing oversight responsibilities between key financial regulators. While many in the crypto industry were prepared to back the bill despite compromises, several provisions caused some backlash, particularly those seen as limiting stablecoin yields.
Opposition intensified after Brian Armstrong withdrew his support by arguing that the bill would be worse than maintaining the current regulatory status quo. He stated that Coinbase would prefer no legislation at all over a framework that could stifle innovation.
After the pushback, the Senate Banking Committee canceled its planned markup of the bill, due to the need for additional time to secure enough support. The Senate Agriculture Committee similarly postponed its own markup to later in January. The delays introduced fresh uncertainty, and also reinforced concerns among traders that regulatory friction could weigh on prices in the near term.
