September 24, 2022

The third quarter (Q3) of 2022 was filled with intense scrutiny of crypto assets with Bitcoin [BTC] at the heart of it. The king of crypto assets has recently witnessed a dip in its rail due to the development of major blockchains such as Ethereum [ETH] and Cardano [ADA].

However, BTC still remains the largest crypto asset by market cap by a country mile. While the coin’s price dropped again in the previous quarter, another strange pattern was observed from the on-chain data.

Old BTC, new story

BTC has witnessed price declines in recent months due to continued macro pressure. Another big sell-off was triggered last week after the Ethereum Merge was launched. However, in light of these events, BTC witnessed a downward trend in volatility. Average 30-day volatility for August 2022 is down 20% from the 80% seen in June.

Source: Messari

Messari pointed to one of the most important impacts of reducing bitcoin price volatility in the recent past report. Bitcoin’s lower volatility has resulted in smaller liquidations in the larger crypto market.

In total, long liquidations in August 2022 were over $5 billion, less than half of June ($10.8 billion). Total short liquidations were also significantly lower. During August, short liquidations recorded about $3.5 billion compared to over $6.6 billion in June.

Source: Messari

A network puzzle

With the changes, the BTC network also underwent some transitions in the previous quarter. In addition, there has been a slowdown in funded addresses for the network. In Q3 2022, funded addresses grew by only 1.1% compared to 2.5% in Q2 2022. Moreover, the number of funded addresses experienced its first decline in August 2022 after 10 months of growth.

The network also witnessed a 4% drop in average daily active addresses running to 890,000 compared to Q2 2022. However, Messari stated that,

“Active addresses appear to have returned to their baseline of activity, after the cycle peaked in Q4 2021, along with prices.”

Source: Messari

A similar story for BTC from the previous quarter is that daily transactions were largely unchanged. In fact, they went on to record over 250,000 daily transactions throughout the year. However, a decline was seen in average transaction fees as the average fee per transaction fell by 21% to $1.4.

Source: Messari

At the time of writing, BTC has been in a state of intense speculation in the crypto community about its future. The price of BTC also exchanged hands below $18,900, with sellers having the advantage over the past week.

This move brings BTC’s weekly losses to 7% as it struggles in a bear market.

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