Ethereum Network Activity Surge Linked to Address Poisoning Attacks

VADODARA, January 20, 2026 — A sharp increase in Ethereum network activity, initially interpreted as bullish organic growth, is now being attributed to large-scale address poisoning attacks exploiting reduced gas fees. This daily crypto analysis reveals that last week saw 2.7 million new addresses created and daily transactions approaching an all-time high of 2.9 million, according to Cointelegraph. Security researcher Andrey Sergeenkov's analysis indicates network fees have decreased by over 60% since the Ethereum Pectra upgrade in December 2025, creating an optimal environment for these malicious operations.

Market Context & Background

Ethereum's transition to a proof-of-stake consensus mechanism and subsequent upgrades like Pectra have systematically reduced base layer transaction costs. The Pectra upgrade, specifically implementing EIP-7702 for account abstraction, was designed to enhance user experience and scalability. Consequently, lower gas fees have historically correlated with increased network utility and developer activity. However, this reduction has also lowered the economic barrier for malicious actors. Underlying this trend is a fundamental shift in attack vectors: from high-cost exploits like flash loan attacks to low-cost, high-volume social engineering scams. This mirrors the 2021 period when NFT minting frenzies similarly distorted transaction metrics, though the current scenario involves direct financial theft rather than speculative activity.

What Happened?

According to on-chain data from Etherscan, Ethereum processed approximately 2.9 million transactions daily last week, nearing its all-time high. Concurrently, 2.7 million new addresses were created, a figure that significantly exceeds typical organic growth patterns. Security researcher Andrey Sergeenkov's analysis, as reported by Cointelegraph, links this surge to address poisoning attacks. This scam method involves attackers generating vanity wallet addresses that match the first and last characters of a target user's address, tricking them into sending funds to the wrong destination. The attacks exploit the lower gas fees post-Pectra, making it economically viable to spam the network with fraudulent transactions. The official Ethereum.org documentation on security warns against such social engineering tactics, though implementation remains a user responsibility.

Technical Analysis & Price Action

Market structure suggests the surge in transactions has not translated into bullish price momentum. Ethereum is currently trading at $3,133.87, down 1.89% in the last 24 hours. The Relative Strength Index (RSI) on the daily chart sits at 42, indicating neutral momentum with a bearish bias. Key support levels are identified at the $3,050 Fibonacci retracement level (38.2% from the recent swing high) and the 200-day moving average at $2,950. Resistance is firm at $3,250, a previous order block where significant sell-side liquidity was absorbed. The volume profile shows declining buy-side interest despite the transaction spike, confirming the activity is not driven by organic demand. Bullish invalidation is set at $3,050; a break below this level would signal a failure of the current consolidation and target $2,950. Bearish invalidation is at $3,250; a sustained move above would fill the fair value gap and challenge the $3,400 resistance.

By The Numbers

Why It Matters

For institutions, this event highlights the critical need for advanced on-chain forensic tools to distinguish between organic and malicious activity. Distorted metrics can lead to flawed investment theses based on inflated network usage. For retail users, the risk profile escalates significantly; address poisoning attacks directly target individual wallets, bypassing exchange security layers. The economic impact is twofold: victims lose funds, and legitimate users face increased transaction competition from spam, potentially raising fees during congestion periods. This scenario a broader market vulnerability where technological advancements (like lower fees) can be weaponized, necessitating continuous adaptation in security protocols and user education.

Community Sentiment

Market analysts on X/Twitter are expressing concern over the network's health metrics. One prominent on-chain analyst noted, "The transaction surge is a liquidity grab by bad actors, not real demand." Others emphasize the need for wallet providers to implement better address verification features, such as full-address checksum validation. The sentiment is predominantly cautious, with many advising users to double-check all transaction details manually, despite the inconvenience. This aligns with the Fear reading of 32 on the Crypto Fear & Greed Index, reflecting broader market anxiety beyond Ethereum-specific issues.

Price Prediction / Future Outlook

Bullish Case: If the network addresses the poisoning attacks through improved wallet safeguards or layer-2 solutions like Arbitrum or Optimism absorb the spam, genuine activity could resurge. A hold above $3,050 support, coupled with a reduction in malicious transactions, could see Ethereum retest $3,400 as real usage recovers. Historical cycles suggest that post-upgrade fee reductions eventually lead to sustainable growth after initial volatility.

Bearish Case: If attacks persist or escalate, network congestion could return, driving up fees and deterring legitimate users. A break below $3,050 would likely trigger a sell-off toward $2,950, with further downside to $2,800 if the 200-day MA fails. Prolonged fear could lead to a gamma squeeze in options markets, exacerbating downward momentum.