Ethereum Rally Masks Falling Network Demand
Ethereum is up about 15% this month while on-chain activity fell: daily users down 33% from January, average gas near 1 gwei, and exchange inflows resumed May 1 (60,449 ETH).
Ethereum’s price rose roughly 15% over the past month while several on-chain indicators showed weaker network activity. Daily active users, average gas prices and exchange flows moved in directions that contrast with the price advance.
Daily active users on the Ethereum network declined from about 15 million in January 2026 to roughly 10 million by April, a 33% drop over three months. The April reading remains higher than the 6–7 million baseline seen around July 2024, but the speed of the decline is notable in the recent data.
Average gas prices on Ethereum have fallen to near 1 gwei, a sustained low not recorded in roughly two years. Gas price measures demand for block space and affects transaction costs. Under the network’s EIP-1559 fee model, the base fee portion of transaction costs is burned; lower average gas reduces the amount of ETH removed from circulation through that mechanism.
Price action has formed a rising channel since Feb. 6 as Ethereum moved up from a February low of $1,747 after a January high of $3,407. Over that same period, reported trading volume has trended lower even as price has climbed, creating a divergence between price and volume.
Exchange flows showed steady withdrawals through most of April. Net outflows averaged about 300,000 ETH per day through April 28 as tokens moved from exchange wallets to self-custody addresses. On May 1 the net position change for exchange addresses turned positive. By May 4, 60,449 ETH had been deposited to exchange wallets.
Assets held on exchange wallets are available to be traded immediately. The shift from extended withdrawals to new inflows changes how supply sits on exchanges compared with the previous month.
A similar configuration of low on-chain activity and rising prices occurred in July 2024, when active users were near 6–7 million and gas remained low. At that time, prices fell about 40% within days of a major market event.
Technical price levels give specific reference points. At the latest data point, Ethereum traded near $2,383 inside the rising channel that began on Feb. 6. A daily close above $2,466 would push price toward the channel’s upper trendline; a daily close below $2,074 (the 0.236 Fibonacci retracement) would expose lower levels at $1,831 (0.382), the February low of $1,747, and $1,635 (0.5).
Observers use measures such as daily active users, gas price, exchange flows and on-chain volume together to evaluate whether price moves are accompanied by user demand or driven mainly by capital flows. EIP-1559, implemented in 2021, burns the base fee from transactions and therefore links on-chain activity to the net removal of ETH from circulation.
