The cryptocurrency market is at a time of little optimism, with bitcoin staying between $ 30,000 and $ 40,000 in recent weeks. But the signs of weakness are not unique to the major cryptocurrency. Ethereum is also at a low point in activity, as revealed in this week’s report by analytics firm Glassnode.
“Both Bitcoin and Ethereum have experienced a dramatic slowdown in activity on the chain.” , say the researchers, who highlight the drop in active addresses and volume of money moved in both networks.
Although both networks are experiencing a moment negative, Ethereum has worse indicators than Bitcoin, show the graphs of the report, published this Monday, June 21.
Bitcoin has had a considerable reduction in active addresses (sending or receiving bitcoins). With around 884,000 addresses, the network fell to the levels of the end of last year. In addition, activity has fallen to 24% compared to the level of 1.16 million that was largely sustained between March and May of this 2021.
The drop in active addresses on Ethereum is stronger in percentage terms, with 30% less than a level seen between April and May. At the time, the Ethereum network had up to 676,000 active addresses, but now it has just over 470,000, falling to levels from the first quarter of this year.
Less transactions, less commissions
As reported by CryptoNews recently, the daily averages of transactions in Bitcoin are also at a low point: last week, that average decreased at 2018 bear market levels.
In the case of Ethereum, a historical chart from Etherscan also shows a decrease in daily transactions. With 700,000 fewer transactions than during the mid-May peak, the Ethereum network is processing as few transfers of value as last December, prior to rally bullish that led its native cryptocurrency, ether (ETH), to exceed $ 4,000 for the first time.
With network activity, commissions also fell. The Glassnode report highlights how in Bitcoin there was a drop towards amounts of BTC received by miners at April 2020 levels. Currently, less than 30 BTC move in commissions daily. Just a few weeks ago, the figure was up to 8 times higher.
In the case of Ethereum, miners’ commission income fell from around 15,000 ETH a few weeks ago to just over 1,900 ETH. That amount of commissions had not been seen since June last year, just before the explosion of decentralized finance platforms, or DeFi, analysts say.
Less value transferred in Bitcoin and Ethereum
“When it comes to the dollar value established in the networks, the decrease in activity is even more dramatic”, Glassnode analysts say. Compared to levels registered in May, both networks are moving less than half the money in dollars.
In Ethereum 68% is being transferred less than the value during the recent peak in May. Currently, daily transfers on this network are equivalent to about 5,000 million dollars, as at the beginning of the year, while at the peak they exceeded 15,000 million dollars.
Bitcoin has decreased 63% in the volume transferred daily. And although it is less than the fall of Ethereum in percentage terms, the fact that the fall does not coincide with a large drop in price stands out. During the last weeks, BTC had remained in a range between 33,000 and 38,000 dollars, although the transferred value fell from almost 50,000 million dollars a day to about 18,000 million dollars.
Mining power in full decline
With the Chinese government launching a campaign to persecute miners of bitcoin and other cryptocurrencies, the accumulated power of both networks has been falling steadily in recent weeks.
For Ethereum, the loss of hash rate has not been as strong, returning to levels of April this year. But Bitcoin fell for the first time since last year below 100 EH / s , as this newspaper reported this Monday, June 21.
Historically, much of Bitcoin’s processing power has been based in China, as we have previously reported. Now, with ongoing bans in various provinces of the Asian giant, the world’s main cryptocurrency networks are being affected, with thousands of machines leaving the country, as confirmed in recent reports.
Glassnode analysts consider that, “As the Chinese mining industry faces the logistical challenges of relocating, migrating or selling its hardware and facilities, it is likely that some will liquidate a portion of their accumulated BTC treasures.”
If this situation occurs, the panorama would change completely. For the last few weeks, Glassnode itself has been reporting few sales from miners. Instead of selling their bitcoins to cover expenses, they appear to be in the same phase of accumulation than large investors, waiting for new price highs.
If this behavior reverts, the outlook could turn more bearish. Especially considering that this Tuesday, June 22, BTC broke the support of $ 30,000 for the first time since the beginning of the year.
Although the scenario does not look very optimistic, Glassnode stands out in its report that investors seem to keep hoarding BTC. This behavior has historically been related to price increases, by reducing the supply of coins in the market.
The bitcoins that are currently moving they are mostly “young” (bought shortly before). That is, they belong to short-term investors, predictably speculators and traders who play with price fluctuations.
On the other hand, the number of coins with at least 3 to 12 months old (without going from one address to another) continues to grow, as has been happening so far this year. Analysts such as Willy Woo or PlanB still expect new all-time highs for the end of 2021, although the market is currently in a moment of uncertainty and with a more gray than promising tone.
