Cryptocurrency's substantial surge to $97K leads to concerns as network activity slows down: Is it reason enough to be alarmed?
Revised Article:
Bitcoin's On-Chain Activity Remains Weak Amid Skyrocketing Prices: Why Is This Happening?
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While Bitcoin [BTC] has been on a stellar run, soaring to a mind-blowing $97K, the network's activity has been disappointingly sluggish.
This is a mind-boggling scenario considering the enthusiastic buzz in the crypto community. So, why isn't Bitcoin's on-chain activity matching its spectacular price surge?
Our sleuths at Alphractal have uncovered six compelling reasons to explain this conundrum.
🔎 Unraveling Bitcoin's On-Chain Activity Puzzle
- Price Driven by External Factors: The current run is largely influenced by external factors like institutional interest, Spot ETFs, and capital inflows. This means that the Bitcoin market's value has less to do with real blockchain usage and more to do with these external forces. This is backed up by the continued accrual of MicroStrategy, Metaplanet, and BlackRock's spot ETFs.
- Tame Volatility: The price volatility has been remarkably low, stagnating between $92K and $95K. This lackluster price action hasn't been able to spark the necessary movement to trigger active wallet action. In this environment, it's no wonder that investors are content to lounge around and watch the action. This leads to a decrease in on-chain transactions.
- Artificial Exchange Volumes: Some exchange volumes appear inflated, creating a misleading picture of activity while the actual network usage stays relatively sedate.
- Shifting Usage: Other networks like Ethereum [ETH], Solana [SOL], and Base are captivating DeFi, staking, and memecoin activity. It's like a circus, with all the fun happening on these other chains, leaving Bitcoin in the dust. For instance, the Solana chain reigns supreme for memecoins, while Ethereum claims the throne for staking. With the clowns all jumping ship, Bitcoin is facing a tough time.
- Diminished Appeal as a Payment Network: The appeal of Bitcoin as a practical payment network has taken a nosedive. This means that prices are taking off at a faster rate than network activity, which is generally unsustainable and could lead to a price correction to meet actual demand.
- Rising Traders on Second Layers: The use of second layers like the Lightning Network is growing exponentially. More transactions are shifting off-chain, and it's leaving Mainnet activity looking pretty bleak.
In short, we're witnessing a tragicomedy: Bitcoin's high price doesn't necessarily mean increased blockchain usage. It looks like BTC is more of a financial asset these days, with the real action happening elsewhere on the blockchain circuit.
💰 What Does This Mean for BTC?
In the end,Bitcoin's impressive performance on the charts doesn't tell the whole story. The lack of increased network usage suggests that Bitcoin is increasingly treated as a macro financial asset, not as a decentralized currency designed for everyday use. And without on-chain demand picking up, BTC's price growth could face structural limits.
古了斯·馬霍納和法拉哈·米克サ
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虛擬貨之金融階進，雖然Bitcoin [BTC] 已騰上97000美元比特币, 但網絡使用 activity, 明顯低於最近的價格上漲的期望。
這是一個令人莫名其妙的狀況，在密码體積充滿
- Despite Bitcoin's [BTC] soaring price, its on-chain activity remains sluggish, a phenomenon that our researchers at Alphractal attribute to various reasons associated with the crypto market.
- One reason could be the influence of external factors, such as institutional interest and Spot ETFs, on driving the current run, thereby decoupling the market's value from real blockchain usage.
- The low price volatility could also contribute to the lack of on-chain activity, as it hasn't sparked active wallet action and led investors to remain complacent.
- Artificial exchange volumes, creating a misleading picture of activity while actual network usage remains relatively sedate, might be another factor.
- Other networks, like Ethereum [ETH], Solana [SOL], and Base, are capturing DeFi, staking, and memecoin activity, causing some investors to shift their focus, leaving Bitcoin less active.
- The rising number of traders on second layers, like the Lightning Network, and the diminished appeal as a practical payment network may also hurt Bitcoin's on-chain activity.
In summary, while Bitcoin's high price may not necessarily reflect increased blockchain usage, the crypto seems to be treated more as a financial asset than a decentralized currency designed for everyday transactions. This lack of on-chain demand growth could potentially pose structural limits to Bitcoin's future price growth.
