According to WU Blockchain, the total value of USD transactions processed by the Bitcoin network has significantly decreased. Daily volume has declined from its peak of $40 billion in Q3 2022 to $5.8 billion currently. Additionally, the percentage of large-size transfers has dropped from 42.8% before the FTX collapse to 19.0% at present.
After entering the new year, the digital asset market witnessed a peculiar trend – Bitcoin’s trading range between $16.4k and $16.9k hardly fluctuated for three weeks straight. As expected, this New Year period was unsurprisingly tranquil throughout all markets, including the digital asset sphere.
Yesterday, after three weeks of stagnation, Bitcoin broke through the $17,000 barrier and made significant gains of 2% in the daily chart and 4% in the weekly chart. According to CoinMarketcap’s data, the cryptocurrency is currently trading at $17,225.06, with a 3.21% increase in the weekly chart but no change in the daily chart.
Despite the incredibly low on-chain utilization, Bitcoin is not the only blockchain that has been affected. Ethereum’s mean gas price has stayed within a range of 16 to 23 Gwei since September, levels similar to what was observed during June-July 2021 and the post-COVID market panic in May 2020.
Bitcoin Network Has Been In Free-Fall
Glassnode reports that there was a temporary increase in the number of new Bitcoin addresses after the FTX incident, but activity has since slowed. The monthly average of new addresses is returning to its usual level, suggesting that network usage has been recovering sustainably.
The 2019–20 timeframe is an important historical illustration of how on-chain activity indicators may be used to track a recovery in network fundamentals.
According to the report:
Despite this short burst of address activity, the total USD value processed by the Bitcoin network has been in free fall. Daily transfer volume has collapsed from the ~$40B heights in Q3-2022 to just $5.8B/day today.
This indicates that the daily settlement volumes have returned to their pre-bull 2020 levels and suggests that there has been a decrease in the amount of institutional capital flowing through the network.
A decline in transfer volume is largely due to a decrease in large transactions ($10M+). It may indicate a decrease in institutional capital flows and a lack of confidence in this group. It is possible that this also reflects the removal of questionable capital flows associated with FTX/Alameda.
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