Bitrabo Editorial
The major cryptocurrencies, Bitcoin and Ethereum, are experiencing a significant change in investor mood and engagement, highlighted by a downward trend in network activities that has resulted in their recent poor performance.
Plummet in Active Users for Bitcoin and Ethereum in 2024
Recently, there has been a dramatic decline in the activity levels of Bitcoin and Ethereum, primarily driven by a continuous decrease in active addresses. Kyle Doops, a market analyst and host of the Crypto Banter show, revealed this concerning trend on the platform X (previously Twitter), sparking discussions about its implications for these leading cryptocurrencies.
This downturn suggests a possible slowdown in user engagement and a significant drop in transaction activity, hinting at a weakening market momentum for Bitcoin and Ethereum. The decline is attributed to several factors, including market instability and profit-taking due to current price fluctuations, which may result in users temporarily disengaging from the networks.
According to Doops, the number of active addresses with these cryptocurrencies has been on a steady decline since the year began, despite the prevailing expectation of a bullish market. This trend indicates that fewer wallets are interacting with the two blockchain networks.
Doops emphasized the importance of having patience regarding a transition to quantitative easing, which could be essential to reignite enthusiasm in the market, especially with the ongoing withdrawal of liquidity by the Federal Reserve.
Additionally, the on-chain data firm CryptoQuant has brought attention to this trend, indicating that there is a lack of new investors entering the crypto market, as previous investors have already participated in anticipation of upcoming Spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs).
Despite this, CryptoQuant mentioned that the reduction in active addresses signifies a lack of excitement, and the anticipated market rally following the Fed’s initial rate cut has not yet occurred because the Fed is still engaged in quantitative tightening, which pulls liquidity from the market.
Moreover, CryptoQuant observed a rise in the M2 money supply during this period. They expect that a resurgence in active addresses and renewed market enthusiasm will happen once the Fed reinstates quantitative easing, which involves infusing liquidity back into the market.
Rising Negative Sentiment
Bitcoin and Ethereum continue to face challenges in gaining momentum amidst overall market volatility, prompting worries regarding the future of these top digital currencies.
As it stands, Bitcoin’s price has dropped by nearly 2% in the last day, now trading at $60,945, while Ethereum’s price has declined by nearly 5%, trading at $2,360 within the same timeframe. Both cryptocurrencies are witnessing diminishing investor confidence, as indicated by a significant reduction of over 19% in their trading volumes.