Ethereum has posted a sharp, record-breaking rise in daily transactions and active addresses, but the jump is unlikely to signal healthy network expansion, according to analysis from Wall Street investment bank Citi.
“This transaction trend is often associated with ‘address poisoning’ scam campaigns,” wrote analysts Alex Saunders and Vinh Vo in the Thursday report.
A closer look at the data shows that much of the new activity consists of transactions valued at less than $1, a pattern more commonly associated with “address-poisoning” scams than with organic user adoption, the bank said.
The analysts explained that in address-poisoning campaigns, malicious actors send tiny amounts of crypto from wallet addresses that closely resemble those victims frequently use, hoping to trick users into mistakenly sending funds to the wrong destination in future transactions.
Ethereum’s currently low transaction fees make it inexpensive and easy for attackers to generate large volumes of this kind of activity, inflating headline network metrics without reflecting real demand, the report noted.
This trend was pointed out this week by onchain researcher Andrey Sergeenkov, who said that the recent jump in Ethereum activity is closely tied to stablecoins, which account for roughly 80% of the unusual growth in new addresses.
During his research, Sergeenkov tracked USDT and USDC transfers under $1 and isolated senders that distributed these small amounts to at least 10,000 unique addresses. The largest of those were smart contracts that sent tiny amounts of stablecoins to hundreds of thousands of wallets, financed by a function designed to fund large batches of poisoning addresses in a single transaction.
‘Malicious behaviour’
Despite the burst of on-chain activity, ether’s ETH$2,938.24 price performance has lagged behind bitcoin BTC$89,277.11 over the same period, with BTC maintaining more stable gains while ETH‘s valuation has shown greater volatility.
The Ether price has been flat this year, underperforming BTC, which has risen 2.4% over the same period. However, ETH has been faring slightly better than BTC in the last six months.
According to Citi’s analysts, the apparent surge on Ethereum stands in stark contrast to Bitcoin, where onchain user activity has continued to drift modestly lower rather than spiking.
This divergence underscores the likelihood that Ethereum’s recent activity burst is a network-specific phenomenon driven by “malicious behavior,” not a sign of broader growth across the crypto market.
Rival Wall Street firm JPMorgan (JPM) is also skeptical about Ethereum’s growth outlook.
The bank said in a report on Wednesday that while the network’s December Fusaka upgrade drove an immediate drop in fees alongside a jump in transactions and active addresses, it questioned whether the rebound would persist given competition from layer-2 blockchains and rival chains.
Read more: Ethereum upgrade sparks activity spike, but JPMorgan doubts it will last
