Connect with us
Active Currencies 14774
Market Cap $2,547,893,370,323.30
Bitcoin Share 51.19%
24h Market Cap Change $0.87

Here we go again: Bitcoin’s incredible price rally does not reflect soaring fundamentals

3min Read
Here we go again: Bitcoin’s incredible price rally does not reflect soaring fundamentals

Share this article

In the cryptocurrency world, nothing moves in tandem.

Price is often seen as the be-all-and-end-all when Bitcoin is gazed upon, but this tells only half the story. Key fundamental metrics like daily active addresses, transaction speed, transaction fee, hashrate and more are often sought to paint the complete picture of the top cryptocurrency and its hopes of being a global financial currency, and on that front, its’ prospects are looking bleak.

 While the price is breaking resistance after resistance, inching closer to its YTD high of $13,800, and its hashrate has soared by 27x compared to the beginning of 2017, the daily active addresses have not received the bullish-note and is slumping.

 According to the cryptocurrency research firm, Longhash, while the price has moved up by over 200 percent in the past three months, the daily active addresses has fluctuated, and its current point is lower than what it was at the beginning of the recent bull-run.

 To be fair, other cryptocurrencies like Litecoin and Bitcoin Cash have also seen a decline in daily active addresses as their prices have soared by 292 percent and 155 percent respectively, since the beginning of the year. Hence, this correlation is not limited to just Bitcoin. Interestingly, the only top cryptocurrency that has seen a positive daily active address movement, is Ethereum, while its price has shot up by over 111 percent since 2019 began.

 The first quarter of this year saw Bitcoin trudge sheepishly towards $4,000 and then as April began, everything changed. On April 2, Bitcoin soared by 17 percent on the 24-hour scale, and broke $5,000, which initiated the bull-run, eventually taking the price well over $13,000 less than three months later. This, according to many, marked the date for the bull-run.

However, while the price soared, the daily active addresses which invariably shows the number of addresses that hold the top cryptocurrency has downed.

 Longhash reported, citing data from BitInfoCharts, that on April 1, the daily active addresses recorded was 698,000. In the next two months, the metric hovered between 600,000 – 1 million, topping out at 1.04 million in mid-June as the price surged upwards owing to the Libra bulls.

With the price continuing its momentum, briefly disturbed by last week’s correction which dropped the price to four-figures, the daily active addresses recorded on July 7 was 655,000, over 40,000 less than what it was on April 1. Something to salvage for the community is that metric was recorded on the weekend, which Longhash stated does result in a drop in activity however this does point to a “trend forming towards Bitcoin network usage.”

 “Pullback in network activity,” is how the report detailed the divergent movement of the daily active addresses vis-à-vis the price of Bitcoin. Longhash added that the on a long term basis, the price of the cryptocurrency will depend on the on-chain activity.

 “The medium to long term price action for Bitcoin has always been somewhat tied to its underlying on-chain activity. 2017 was a great example of this, where prices tracked the rise and fall in network activity very closely throughout the entire market cycle.”

 To pacify the readers, Longhash concluded looking at the larger picture and attesting to divergent movement can be seen across the board. The “overall crypto landscape looks less clear,” and presents “mixed signals,” when a multitude of on-chain metrics are studied for a range of cryptocurrencies.

Share

Chayanika is a full-time cryptocurrency journalist at AMBCrypto. A graduate in Political Science and Journalism, her writing is centered around regulation and policy-making regarding the cryptocurrency sector.
Read the best crypto stories of the day in less than 5 minutes
Subscribe to get it daily in your inbox.
Please check the format of your first name and/or email address.

Thank you for subscribing to Unhashed.