Bitcoin and Ethereum lack enough network demand for the rally to continue, here’s how
Despite the current macro headwinds, Bitcoin and the broader cryptocurrency market held strong last week. The crypto market is currently undergoing a partial retracement and it will be interesting to see if it can hold up to the $1 trillion benchmark.
Glassnode brings some metrics on the chain to understand if this is just a bear market rally or a bullish trend reversal.
Bitcoin On-Chain Metrics
The data provider refers to the current price rise as bearish impulses since active Bitcoin addresses continue to remain in a downtrend channel. However, although there have been few spikes in activity during the capitulation events, the wider network activity suggests that there is little influx of new demand as of now.
Furthermore, the transaction fees on the chain show that we are still in bear market territory. Currently, only 13.4 BTC in total fees are paid each day. Unlike the current bear market, bull markets often maintain elevated fee rates, showing the first signs of recovery in demand.
As of the current scenario, the Bitcoin network blocks remain partially empty with low network load. Glassnode notes: “This indicates that the Bitcoin network overall remains HODLer-dominated, and so far there has been no notable return on new demand, seen through the lens of on-chain activity.”
But on an upbeat note, the Bitcoin Lightning Network public channels continue to hit new records. Lightning Network’s public capacity has now reached a total of 4405 BTC. Lightning network capacity has jumped nearly 20% in the past two months despite strong bearish sentiment.
Ethereum On-Chain Metrics
Ethereum has experienced the same trends as Bitcoin over the past 12 months. There has been a gradual deterioration in overall network usage and congestion. Despite the recent ETH price pump, the network congestion is still the lowest. Over the past year, the demand for Ethereum transactions has been on a gradual decline.
As Glassnode explains: “Ethereum gas prices have recently dropped to just 17.5 Gwei on a 7-day median basis. This is the lowest network load and gas price since May 2020, which was before DeFi Summer, and before the initiation of the bull market.
The content presented may include the author’s personal opinion and is subject to market conditions. Do market research before investing in cryptocurrencies. The author or publication bears no responsibility for your personal financial loss.
