Bitcoin And Ethereum Activity Dips: Active Addresses See Steady Decline
The two largest cryptocurrency assets, Bitcoin and Ethereum are witnessing a notable shift in the behavior and confidence of investor as indicated by a negative trend in their network activity, leading to sluggish performances in the past months.
Active Addresses In Bitcoin And Ethereum Nosedives In 2024
Lately, Bitcoin and Ethereum activity has drastically plummeted due to a persistent drop in the number of active addresses on both networks. Kyle Doops, the host of the Crypto Banter show and market expert, shared the worrying development on the X (formerly Twitter) platform, triggering speculations about its impact on the two leading digital assets.
This pessimistic turn of events indicates a potential slowdown in user adoption and a wider reduction in transaction volume, reflecting that the market momentum of Bitcoin and Ethereum might be decreasing. Several factors, like market uncertainty and profit-taking because of current price swings, are considered to have resulted in the decline, which would cause users to leave the network momentarily.
The market expert highlighted that the number of active addresses has been consistently decreasing since the beginning of this year in spite of the general expectation of a bull market. Specifically, this implies that fewer wallets are engaging with the two blockchains.
Kyle Doops has underscored the need for patience toward a shift to quantitative easing in order to rekindle market excitement as the sector awaits fresh investors because liquidity is being drained by the Federal Reserve’s (Fed) tightening.
Leading on-chain data and analytics firm, CryptoQuant, has also shed light on the development, noting that new investors are not entering the crypto landscape as investors and liquidity have already entered the market in antiticipation of the Spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs).
In spite of this, CryptoQuant noted that the drop in active addresses means that the hype has not materialized yet and there was no rally after the Fed’s first rate cut, as was expected. This is due to the fact that the Fed is continuing quantitative tightening (QT), a process of withdrawing liquidity from the market.
Furthermore, CryptoQuant claims that during the same period, there were also notable increases in the M2 money supply. Ultimately, the platform expects a rise in active addresses and a return of market hype once the Fed resumes quantitative easing once again, a method of adding liquidity to the market.
Negative Price Sentiments Grows
Bitcoin and Ethereum continue to struggle to initiate a rally as a result of the general market turbulence, sparking concerns about the trajectory of the leading digital assets.
Presently, the price of BTC has fallen by nearly 2% in the past day, trading at $60,945, while ETH is seeing a bigger price decline of nearly 5% in the same time frame, trading at $2,360. Both assets are currently experiencing a waning investors’ sentiment as their trading volume is exhibiting a similar reduction of over 19%.