In recent days, some leading cryptocurrencies such as Bitcoin and Ethereum have shown an upward trend in prices. Some are linking the reversal in value to the US President and the recent development of events at the Fed.
However, Glassnode takes a different view. The blockchain analytics company believes that the fundamental change in price value is not real, but just a bull trap.
After spending a few months of crypto winter, Bitcoin is finally making a progressive upward move. The world’s largest crypto asset by market capitalization had crossed $24,500.
This positive change in BTC price came after the US Federal Reserve raised interest rates by 75 basis points. Also, the country recorded negative GDP consecutively in the last quarter of the year. But then, US President Joe Biden has yet to admit that he is sinking into recession.
Despite the previous days price rally, BTC suddenly reversed its upward trend earlier today, August 3rd. After that, however, the token fell below the $23,000 level. According to Glassnode’s market state report, the drop in the price of this BTC is due to reduced network usage.
According to his explanation Glassnode about the false uptrend, the current network activity speaks differently. There is just a small influx of new demand for the brands, although periods of notable capitulation events have given it a brief boost.
In addition, the analyst firm used the case of network fees to prove its point. Typically, there should be a drastic increase as more users engage with the most influential blockchain as evidenced by bullish markets.
Likewise, the reverse should be true in bear markets. However, Glassnode noted that no such exaggeration of a fee-increasing event is going to happen.
A similar trend appears in Ethereum and Bitcoin fees
With its recent performance, Bitcoin isn’t the only major crypto asset that isn’t seeing a fee increase. Also, Ethereum seems to be following the same trend.
According to the on-chain data, the second largest blockchain in the world has significantly reduced the gas fees paid. As a result, it now averages below $5, marking multi-month lows.
Ethereum tends to become an inflationary digital asset as more issues are created with low fee availability. The drop is always due to a decrease in activities and transactions on the network.
Also, the EIP-1559 implementation that came last year with the London fork seems to be lax in performance. It cannot burn enough ether (ETH) as there is a drop in network usage.
All hope is not yet lost for the ETH community. Instead, he expects a positive rebound following the launch of Merge in the coming months.
Featured image from Pexels, charts from TradingView.com