Glassnode sees a positive price reaction for Bitcoin and Ethereum to the Fed’s rate hike. Now the question is to determine if this is a long recovery or a temporary spike.
The positive trend in the cryptocurrency markets does not go unnoticed after months of tension and heightened fears of contagion. In its latest report, Glassnode reports a 5.7% increase for Bitcoin and 7.6% for Ethereum over the week.
“In many ways, the recent positive movement in the prices of bitcoin and ethereum brings much-needed relief to the bulls, who have endured nearly nine months of a sustained downtrend,” analysts said.
Sluggish activity on the Bitcoin network
However, it is still too early to draw a price trajectory for the next few weeks or even months. Two paths are possible: a respite in a bear market or the start of a sustained bullish momentum.
In order to characterize this kind of “momentum”, in principle, various on-chain indicators are taken into account. Among them is the growth in use and the emergence of new demand.
With the exception of a few bursts of activity during major sales, the current network activity suggests that the influx of new demand is still negligible,” notes Glassnode.
The output is similar to the number of transactions and the need for block space. As such, there is “the only stable base of traders and investors with higher conviction” active on the Bitcoin network.
Bitcoin still dominated by hodlers
As for transaction fees, the data tells a “similar story. This indicator should be watched, even if at this stage it does not signal a real recovery in activity and does not portend a sustainable increase in price.
The Bitcoin network is still dominated by hodlers and so far there has been no noticeable return of new demand when viewed in terms of network activity,” Glassnode said.
The trend is generally quite comparable to Ethereum. In fact, network congestion is declining despite the dramatic rise in the price of ETH in recent weeks.
Low Fees on Ethereum: Uncertainty Remains
Thus, transaction costs remain low and the gas price is at its lowest level in recent years. Conclusion: For both Ethereum and Bitcoin, “transactional demand on the network remains weak at best.”
And while the recent rally is welcome, it hasn’t resulted in “convincing tracking of observed demand activity.” The next few weeks will determine the ability of “these uptrends to sustain and improve.” »
That’s when the big question can be addressed: Is this just a respite from a bear market? [bear market] or more constructive structural changes. An example for investors and the crypto industry in search of positive signals.
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