In the past few days, some leading cryptocurrencies, such as Bitcoin and Ethereum, have shown a bullish price trend. Some link the reversal in value to the US President and the Fed’s recent outplay of events.
However, Glassnode has a contrary opinion. The blockchain analytics firm believes that the fundamental change in price value is not real but just a bull trap.
After passing through some months of crypto winter, Bitcoin is finally making a progressive upward move. The global largest crypto asset by market cap had hit over the $24,500 mark.
This positive change in BTC price came after the US Federal Reserve 75 points increase in interest rates. Also, the country has recorded negative GDP consecutively in the past quarter of the year. But then, US President Joe Biden is yet to admit a plunge into recession.
Despite its past days of price surge, BTC has suddenly turned its upward climb earlier today, August 3. After that, however, the token crawled down beneath the $23,000 level. According to Glassnode’s report on the market situation, this BTC’s price drop is due to the reduced network usage.
According to the explanation of Glassnode on the fake bullish trend, the current network activity speaks differently. There is just a tiny inflow of new demand for the tokens though the periods of notable capitulation events gave it a brief push.
Additionally, the analytics firm used the case of network fees to prove its position. Usually, there should be a drastic increase as more users engage with the most influential blockchain, evidenced by bull markets.
Similarly, the reverse should be the case in bear markets. But Glassnode observed that such outplay of an event with a spike in fees is not to occur.
Similar Trend Show In Ethereum And Bitcoin Fees
With its recent performance, Bitcoin is not the only main crypto asset that is not displaying a rise in fees. Also, Ethereum seems to be following the same trend.
Bitcoin currently trades sideways on the daily candle | Source: BTCUSDT on TradingView
As per the on-chain data, the world’s second-largest blockchain has significantly dropped paid gas fees. As a result, it now has an average price below $5, signifying multi-month lows.
Ethereum is tending toward becoming an inflationary digital asset as more issues build up with its low fees disposition. The drop is invariably from the reduction in activities and transactions on the network.
Also, the implementation of the EIP-1559 that came last year with the London fork seems to slack in performance. It can’t burn sufficient Ether (ETH) since there’s a drop in network usage.
All hope is still not lost for the ETH community. On the contrary, it is expecting a positive turnaround that will follow the launch of the Merge in the next coming months.
Featured image from Pexels, charts from TradingView.com