Several leading cryptocurrencies, such as Bitcoin and Ethereum, have shown bullish price trends over the past few days. Some have linked the value reversal to the recent reaction of the U.S. President and Federal Reserve to events.
However, Glassnode has the opposite view. The blockchain analytics firm believes that the fundamental change in price value is not real, but just a bull trap.
After a few months of crypto winter, Bitcoin has finally started a gradual upward move. The world’s largest crypto asset by market cap has crossed the $24,500 mark.
This positive change in Bitcoin price comes after the Federal Reserve raised interest rates by 75 percentage points. Furthermore, the country has recorded consecutive negative GDP in the past quarter. However, US President Joe Biden has yet to admit to a recession.
Despite the price surge over the past few days, BTC suddenly turned upwards earlier today (August 3). However, the coin has since fallen below $23,000. According to Glassnode’s market situation report, the price drop of BTC is due to a decrease in network usage.
According to explanation glass node There are mixed accounts of current network activity regarding the false bullish trend. Although the period of notable capitulation events gave it a brief boost, there was only a small influx of new demand for the token.
Furthermore, the analytics firm uses the case of network fees to justify its position. Typically, as more and more users participate in the most influential blockchains, there should be substantial growth, as evidenced by the bull market.
Likewise, the opposite should be true for a bear market. But Glassnode observed that such a spike in fees would not happen.
Similar trends in Ethereum and Bitcoin fees show
With its recent performance, Bitcoin is not the only major crypto asset not showing rising fees. Furthermore, Ethereum seems to be following the same trend.
According to on-chain data, the world’s second largest blockchain has drastically reduced gas fees paid. As a result, it now averages below $5, marking a multi-month low.
Ethereum is tending to become an inflationary digital asset as its low fee disposal creates more problems. A drop always comes from a decrease in activity and transactions on the network.
Also, EIP-1559, which was implemented with the London fork last year, appears to be underperforming. It was unable to burn enough ether (ETH) due to declining network usage.
The ETH community still hasn’t lost all hope. Instead, expect a positive turnaround over the next few months with the launch of Merge.
Featured image from Pexels, charts from TradingView.com