The analysis of the current price allows us to understand what is happening in the short term. Still, on the other hand, one can only understand long-term evolution by studying on-chain fundamentals.
Despite Bitcoin (BTC) and Ethereum (ETH) losing more than 50% of their market value, the number of addresses with at least $1,000 has steadily increased.
Prices follow a much more erratic and prolonged trend than the dynamics that arise in the long term, such as the growth in the number of addresses. The latter are, as is well known, much more stressful and follow trends with much shorter durations.
You can start with Bitcoin and see how the orange price line has been steadily declining over the four quarters of 2022. The decline was 65%, between $47,000 in Q1 and $16,600 in Q4.
Also, there was no gradual decline; there were three significant collapses, two of which occurred in the second quarter (Terra and Celsius) and one in the fourth quarter (FTX).
However, the number of Bitcoin addresses reportedly holding at least 0.15 BTC increased steadily to the point where, by the end of the year, it had risen 23% compared to early 2022.
ETH experienced a 64% decline in price from $3,300 to below $1,200, excluding short spikes. However, at the same time, there were 21% more on-chain addresses with at least one ETH.
This rise may have been slightly less than Bitcoin’s because a smaller percentage of people are likely to view BTC as a store of value than do the same for ETH.
However, it should be noted that since ETH switched to PoS, the gap between it and BTC in this context has narrowed significantly recently. It’s because ETH is now in deflationary supply, at least for the time being.
