Bitcoin hit its peak in April at $64,895 and has been on a downtrend over the past two months. Selling pressure was escalated by the dump observed on 19 May and this forced the crypto’s value to fall under $40k. With continuous corrections being seen on the charts, BTC later hit a low of $28,600 on 22 June. However, the subsequent recovery pushed it back to $33,884 at press time.
Such a volatility-driven market has induced fear in traders and resulted in low on-chain activity across the board. In fact, Bitcoin and Ethereum were noting demand for block space falling to levels last seen in 2020.
On-chain analysis
With prices hitting yearly lows, the activity in the market has remained restrained. Data from Glassnode suggested that Bitcoin transfer volume has fallen back to 2020 and early-2021 levels. The active addresses have fallen by 24% from the generally sustained peak of 1.16 million from March to early May.
The press time activity of 884k addresses was last seen this time last year.
In the case of Ethereum, the altcoin’s active addresses have fallen by a whopping 30% from the brief peak of around 676k addresses. What’s more, press time activity was down to 474k addresses per day, a figure last seen in Q1 of 2021.
Source: Glassnode
With transactions falling, the priority fees for inclusion in the next block have also fallen significantly. The network was free of congestion, thus, users did not have to pay high fees to process transactions. This has resulted in the Bitcoin total fees falling just under 30 BTC/day [~$1.2 million]. Such a low fee was last seen in late 2019 and early 2020.
As per data, this made up around 4% of miner revenue with the remaining 96% contributed to by the block subsidy.
Source: Glassnode
Similarly, Ethereum’s daily fee dropped from over 15k ETH/daily in early May to 1.9k ETH [$4.34 million]. Decentralized Finance [DeFi] apps had kept the ETH market afloat, however, with wavering fees users have of late moved on to Polygon and Binance Smart Chain to interact with DeFi apps. Right now, low fees represent 10% of total miner revenue, a percentage that was last seen way back in June 2020 before the DeFi rally even began.
Source: Glassnode
On-chain data suggests bearishness settling in the market. As Bitcoin and Ethereum undergo a major correction phase, some traders are still holding strong. Even though the demand for transactions for digital assets has significantly fallen, they could reflect an unwillingness of strong hands to sell their assets at the press time price.
