Two major cryptocurrency assets, Bitcoin and Ethereum are seeing a significant change in investor behavior and confidence as shown by the negative trend in their network activity, leading to sluggish performance in recent months.
Active Addresses In Bitcoin And Ethereum Nosedives In 2024
Recently, the activity of Bitcoin and Ethereum has decreased significantly due to the continuous decrease in the number of active addresses on both networks. Kyle Doops, Crypto Banter show host and market expert, shared the worrying development of the X platform (formerly Twitter), causing speculation about its impact on the two leading digital assets.
This pessimistic turn of events indicates a possible decline in user adoption and a broader reduction in transaction volume, indicating that Bitcoin’s market momentum and Ethereum may decrease. Several factors, such as market uncertainty and profit taking due to current price fluctuations, are considered to have led to the decline, which may cause users to temporarily leave the network.
The market expert emphasized that the number of active addresses has been decreasing continuously since the beginning of this year despite the general expectations of a bull market. Specifically, this means that several wallets interact with two blockchains.
Kyle Doops emphasized the need for patience in the transition to reducing the amount to revive the market’s enthusiasm as the sector is waiting for new investors because the economy is weakening due to the tightening of the Federal Reserve’s (Fed).
The leading on-chain data and analytics company, CryptoQuant, also has it light up in development, noting that new investors are not entering the crypto space as investors and liquidity are already entering the market in anticipation Spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs).
Despite this, CryptoQuant noted that the decline in active addresses means that the hype has not yet materialized and there was no rally after the meeting. The first rate of Fed cutsas expected. This is because the Fed continues to tighten quantitative tightening (QT), the process of withdrawing money from the market.
In addition, CryptoQuant says that during the same period, there has been a significant increase in the money supply of M2. Finally, the platform expects an increase in active addresses and the return of market hype once the Fed resumes rate easing again, a way to add money to the market.
Negative Price Sentiments Are Growing
Bitcoin and Ethereum continue to struggle to start a rally due to the general market turmoil, which raises concerns about the trajectory of leading digital assets.
Currently, the number of BTC down about 2% on the previous day, trading at $60,945, while ETH sees a significant price drop of around 5% over the same period, trading at $2,360. Both of these assets are currently facing subdued investor sentiment as their trading volume shows a similar decline of more than 19%.
Featured image from Unsplash, chart from Tradingview.com