Network activity on the bitcoin (btc) blockchain appears to have stagnated while it is declining on ethereum (eth), a crypto-market-to-stay-highly-correlated-to-stocks-amid-macro-events-and-dwindling-network-activities-citi-says-1033753839″ target=”_blank” rel=”noopener nofollow”>report by Citi says.
Network activity is tepid on bitcoin and ethereum
One of the key metrics used to determine user interest in a blockchain project is the measurement of their network activity. High network activity (unless supported by trading bots) typically indicates that there are more users transacting on the underlying blockchain network, allowing block miners to earn more rewards for confirming transactions. However, the opposite does not paint such a rosy picture.
According to a report from Citi, bitcoin network activity appears to have stagnated. Data from blockchain.com confirms Citi’s assessment. In the chart below, we can see that the number of confirmed transactions per day on the bitcoin network appears to be oscillating in a range since April 2024.
At the same time, btc prices have been on a steady downward trend, reaching lower highs after each bounce from the range lows around $56,000.
If we focus on ethereum data, we see a similar trend. The ethereum daily transactions chart shows a slight decrease in daily transactions, from about 1.37 million on March 19 to 1.12 million on September 5.
Network activity on any blockchain is highly dependent on the number of users or unique wallet addresses used on the network in question. If we look at the unique addresses used on the bitcoin network, we see that it is below to 539,154 addresses on September 4, 2024, from 1,017,545 addresses on September 14, 2023. Interestingly, the number of unique addresses on ethereum has remained stable.
However, it is worth noting that sometimes many users may have more than one wallet address, which could slightly reduce the reliability of this data point.
Additionally, the report says that bitcoin and ethereum exchange-traded funds (ETFs) have seen net outflows, indicating a weak conviction among investors to hold digital currencies during economic uncertainties. Specifically, bitcoin ETFs experienced outflows to $305 million on August 31, 2024.
The cryptocurrency market will continue to be highly correlated with the stock market
Citi report notes that the digital asset market is expected which remain highly correlated with stocks. However, in contrast, a recent post by Santiment on x fixed that bitcoin is becoming less sensitive to stock market trends and, over time, could eventually decouple from it.
That said, perennial bitcoin bulls like Michael Saylor, CEO of MicroStrategy, are still betting on the leading digital currency. Recently, it came to light that Saylor had bagged approximately $400 million thanks to planned daily sales of about 5,000 MicroStrategy shares.
At the time of writing, bitcoin is trading at $54,097, down 3.3% over the past 24 hours. ethereum is trading at $2,292, down 3.2% over the same period.
Featured image from Unsplash.com, charts from Blockchain.com, Etherscan.com, TradingView.com
