Bitcoin Network Activity Slows as Ethereum Experiences Decline: Analysis by Citi
A recent report by Citi suggests that network activity on the Bitcoin (BTC) blockchain is showing signs of stagnation, while Ethereum (ETH) is experiencing a decline in activity. Network activity is a crucial metric for assessing user engagement with a blockchain project. Typically, high network activity indicates increased user transactions, benefiting block miners with more rewards. Conversely, low activity may raise concerns.
According to Citi’s report, Bitcoin’s network activity appears to have plateaued. Data from blockchain.com supports this observation, showing a consistent number of confirmed daily transactions on the Bitcoin network since April 2024. Concurrently, BTC prices have been on a downward trend, forming lower highs with each rebound from around $56,000.
Turning to Ethereum, a similar pattern emerges. Daily transactions on the Ethereum network have slightly decreased from approximately 1.37 million on March 19 to 1.12 million on September 5. Network activity on any blockchain heavily relies on user participation, reflected in the number of unique wallet addresses. Notably, Bitcoin has seen a decline in active addresses, dropping to 539,154 on September 4, 2024, from 1,017,545 on September 14, 2023, while Ethereum’s unique address count remains stable.
The report also highlights net outflows from Bitcoin and Ethereum exchange-traded funds (ETFs), indicating investor uncertainty during economic volatility. Bitcoin ETFs experienced outflows of $305 million by August 31, 2024. Citi’s report predicts continued high correlation between the digital assets market and equities. However, some sources suggest that Bitcoin’s sensitivity to stock market trends is diminishing, hinting at a potential decoupling in the future.
Despite market fluctuations, prominent Bitcoin proponents like Michael Saylor, CEO of MicroStrategy, remain bullish on the cryptocurrency. Saylor reportedly profited around $400 million through planned daily sales of MicroStrategy shares. Presently, Bitcoin is trading at $54,097, down 3.3% in the last 24 hours, while Ethereum stands at $2,292, marking a 3.2% decrease in the same timeframe.
In conclusion, the crypto market’s network activities and investor sentiments are closely monitored indicators of the market’s health and future trajectory. As Bitcoin and Ethereum navigate these challenges, the broader market dynamics and evolving correlations with traditional assets will continue to shape the digital asset landscape.
