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26 Sep 2022
Bitcoin’s on-chain activity falls back to its depressing normal
Bitcoin’s on-chain activity has been depressed this entire year. We saw a slight rebound in the on-chain activity one week ago, but it’s now back to its depressing normal.
We can look at two primary metrics to get a high level overview of on-chain activity: the number of active addresses and the daily transaction fees. Active addresses indicate how many individual users transact on the network, while transaction fees per day are a proxy for the demand for using the network.Both these metrics are down significantly over the past seven days. We mainly see a massive 19% decline in the transaction fees per day, and they are currently sitting at only $254k – a very low level historically.The transaction fees have plummeted due to limited demand for block space. The daily transaction volume fell by 39% over the past seven days and now sits at only $3.1 billion. This is due to a 38% reduction in the average transaction value, which is now only $12k.Source: BytetreeIn general, the lower on-chain activity can be ascribed to a bump in on-chain activity during the past two weeks caused by the merge. It was the biggest happening in several years in crypto, naturally leading to increased on-chain activity. With this event in the rearview mirror, activity returns to its depressed “normal”.The Bitcoin network will reduce its mining difficulty by 2.1% tomorrow. A highly welcomed reduction by the bitcoin miners, who have seen their revenues plummet lately. Bitcoin mining revenues also continue falling and are now only $17.2 million per day, far from the November highs of $62 million.