Investors in wait-and-see mode: Bitcoin and Ethereum spending on the decline

While on-chain activity is falling asleep, the number of “young” coins is declining for both Bitcoin and Ethereum. Market Update.

The crypto market is turning positive again after a failed start to the week. However, the bitcoin price is unable to benefit from this at the moment. The largest cryptocurrency slides in the 24-hour comparison by a bearable 0.2 percent into the red and thus trades at the editorial deadline at 47,755 US dollars. On a weekly basis, the BTC price loses 3.3 percentage points.

Some of the altcoins were able to post strong price gains. While Cardano (ADA), Binance Coin (BNB) and Dogecoin (DOGE) are taking moderate price losses of up to two percent, Ethereum (ETH) is rising by 5.5 percent on the day. XRP is settling in leisurely with a gain of 0.5 percent. The two outliers are Solana (SOL), up 20 percent, and Polkadot (DOT), up 10 percent.

On-chain activity in snooze mode

Although Bitcoin and Ethereum have seen significant price increases in recent weeks, on-chain activity is still in dormant mode. According to Glassnode’s latest Week On Chain report, trading activity for both Bitcoin and Ethereum is well below recent record highs. The number of active units, those that are either receiving or issuing transactions, currently stands at 275,000 daily on the BTC network. That’s down 35 percent from January.

On Ethereum, the number of active addresses is also down 33 percent from its peak in May. Currently, it stands at around 450,000 a day.

The picture is similar for the number of transactions. Currently, the number has dropped to an average of 200,000 transactions per day, a 37.5 percent drop from the record high.

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Hodl trend in Bitcoin and Ethereum.

Although on-chain activity is down, this is only a limited way to draw conclusions about whether market sentiment is more bullish or bearish. As Glassnode adds, much of the trading activity is shifting to off-exchange direct trading. In addition, there are derivative financial instruments and the use of second-layer solutions such as the Lightning Network, which are not settled on-chain.

Accordingly, the distribution and accumulation of BTC holdings at the respective price levels is more meaningful for overarching market trends. This shows that the number of “young” coins, i.e. those that have been moved in the past three months, is declining and only account for 15 percent of the total volume in circulation. According to Glassnode, these coins are typically particularly vulnerable to sell-offs. Converselys, the decline in “hodl waves” shows an accumulation trend among investors.

Ethereum also shows a downward trend in young coins, where they are “heading for a long-term low of 12.5 percent of circulating supply.” This is a good sign, as “older coins are statistically less likely to be issued, and their rising share indicates an increasingly illiquid supply.”