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Bitcoin and Ethereum Lack Enough Network Demand for the Rally to Continue, Here’s how

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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 on-chain metrics to understand whether this is just a bear market rally or a bullish trend reversal.

Bitcoin On-Chain Metrics

The data provider refers to the current price surge as bearish impulses since Bitcoin active addresses continue to remain in a downtrend channel. Although there have been few activity spikes during the capitulation events, however, the broader network activity suggests that there is little influx of new demand as of now.

Courtesy: Glassnode

Furthermore, the on-chain transaction fees show that we are still in the bear market territory. Currently, there’s only 13.4 BTC in total fees paid every day. Unlike the current bear market, the bull markets often maintain elevated fee rates showing up first signs of demand recovery.

Courtesy: Glassnode

As of the current scenario, the Bitcoin network blocks are remaining partially empty with low network congestion. Glassnode notes: “This indicates that overall, the Bitcoin network remains HODLer dominated, and as yet, there has not been any noteworthy return of new demand, as viewed through the lens of on-chain activity”.

Courtesy: Glassnode

But on an optimistic note, the public channels for the Bitcoin Lightning Network continue to make new all-time highs. The Lightning Network public capacity has now reached a total of 4,405 BTC. The Lightning network capacity has jumped by nearly 20% in the last two months despite strong bearish sentiment.

Ethereum On-Chain Metrics

Ethereum experienced the same trends as Bitcoin over the last 12 months. There’s been a gradual deterioration in aggregate network usage and congestion. Despite the recent ETH price pump, the network congestion remains the lowest. Over the last year, Ethereum transaction demand has been on a gradual decline.

Courtesy: Glassnode

As Glassnode explains: “Ethereum gas prices have recently declined to just 17.5 Gwei on a 7-day median basis. This is the lowest network congestion and gas price since May 2020, which was prior to DeFi Summer, and before the initiation of the bull market”.

Courtesy: Glassnode

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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