Bitcoin Network Activity Slows as Ethereum Experiences Decline: Analysis
A recent report by Citi suggests that network activity on the Bitcoin (BTC) blockchain and Ethereum (ETH) is showing signs of slowing down. Network activity is a crucial metric for assessing user engagement in a blockchain project. Typically, high network activity indicates increased user transactions, benefiting block miners with more rewards. Conversely, low activity raises concerns.
According to Citi’s report, Bitcoin’s network activity appears stagnant. Data from blockchain.com supports this observation, showing a fluctuating trend in confirmed daily transactions since April 2024. Concurrently, BTC prices have been on a downward trajectory, forming lower highs after each rebound from around $56,000.
Turning to Ethereum, a similar trend is visible. The daily transactions chart for Ethereum reflects a slight decrease from approximately 1.37 million on March 19 to 1.12 million on September 5. Network activity on any blockchain heavily relies on the number of users or unique wallet addresses. While Bitcoin has seen a decline in unique addresses, Ethereum’s count has remained steady.
The report also highlights net outflows from Bitcoin and Ethereum exchange-traded funds (ETFs), indicating investor hesitancy to hold digital assets amid economic uncertainties. Notably, Bitcoin ETFs experienced outflows of $305 million by August 31, 2024.
Citi’s report further predicts that the digital assets market will likely maintain a strong correlation with equities. However, a recent analysis by Santiment suggests that Bitcoin’s sensitivity to stock market trends is diminishing, hinting at a potential decoupling in the future.
Despite market fluctuations, prominent Bitcoin advocates like Michael Saylor, CEO of MicroStrategy, continue to demonstrate confidence in the leading cryptocurrency. Saylor reportedly profited around $400 million through planned daily sales of MicroStrategy shares.
As of the latest data, Bitcoin is trading at $54,097, down 3.3% in the past 24 hours, while Ethereum is priced at $2,292, marking a 3.2% decrease within the same timeframe. The crypto market remains dynamic, with network activities and investor sentiments shaping the ongoing trends.
