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Bitcoin: What this new on-chain metric says about the state of BTC
- Using the coinblocks models, Cointime Economics can determine BTC’s movement.
- The on-chain metric can also identify the liveliness or inactivity of the network.
After 18 months of intense research, a new on-chain metric has been added to the Bitcoin [BTC] clan. And the initiators are none other than on-chain analytic platform Glassnode and global asset management firm ARK Invest.

How much are 1,10,100 BTCs worth today?

As you are probably aware, on-chain metrics play a crucial role in understanding the dynamics of the Bitcoin network and market sentiment. For ARK Invest’s research associate David Puell and Glassnode’s lead analyst James Check, calling this new metric “Cointime Economics” was the best tag to give the metric.

Also, if you are familiar with the on-chain landscape, you’d realize that Puell, the famous creator of the Puell Multiple, is not new to introducing metrics. Check, on the other hand, has also been recognized for his work in contributing to metric development on the Glassnode platform. So, what exactly is the Cointime Economics?

Coinblocks to the rescue?

According to the collaborative research paper, Cointime Economics would act as a fungible measurement of Bitcoin’s supply and demand. In evaluating the metric, Check and Puell noted that some existing metrics need to be considered.

These metrics include the Market Value to Realized Value (MVRV) ratio, the Bitcoin inflation rate, and volume-weighted cost.

Based on the information from the report, a combination of the metrics would help identify Bitcoin’s valuation, activity, and economic state. This, then, leads to the introduction of the coinblocks. The paper explained the term as:

“Coinblocks are the product of the number of Bitcoin and the number of blocks produced during the period in which those Bitcoin remained unmoved.”

But it does not end there. To assess Bitcoin’s economy, value, or network activity, the Coinblocks Created (CBD), Coinblock Destroyed (CBD), and Coinblocks Stored (CBS) would play different roles.

The CBD measures the time-weighted turnover of Bitcoin’s volume, or the number of Bitcoins moved in a given period, holding period, or the time held before moving.

Destruction equals capitulation

So, when there is heavy coinblock destruction, it suggests that long-term holders are selling. It also implies that Bitcoin’s “smart money” trades from lower cost bases while generating higher profits.

Thus, major spikes in coinblocks destroyed have had a high correlation with a peak in Bitcoin’s price.

On the other hand, Coinblocks Stored (CBS) represents the total number of coinblocks or the difference between total coinblocks created and total coinblocks destroyed.

When CBS is negative over a period of seven days, it means that the number of coinblocks destroyed has surpassed the number created. This suggests the movement of a substantial number of old coins in a short period of time.

When the CBS is positive, it implies that coinblocks created have surpassed the number of coinblock destroyed. In this case, it would mean that fewer old coins have moved within a short period.

Lastly, the Coinblocks Created (CBC) represents the total cointime created in the Bitcoin network, irrespective of the coin movement. By combining all the parameters, Glassnode and ARK Invest considered what happened in 2017 when CBD surpassed CBS.

Source: ARK Invest and Glassnode

From the chart above, the research paper concluded that Cointime Economics was building blocks over time. It mentioned that at this point:

“More coins were active in the market as opposed to lost or strongly dormant.”

How lively is the economy?

Another model derived from the report to understand Bitcoin’s economic state was by using liveliness and vaultedness. For context, Bitcoin liveliness is a value from 0 to 1 which shows the rate of liquidation from long-term holders.

If liveliness increases, then long-term holders are liquidating positions. However, a decrease in the metric suggests that holders have decided to continue HODLing. Furthermore, Vaultedness measures the inactivity of the network.

In a case where liveliness increases to 1, then there will be no Bitcoin holders. And when vaultedness reaches 1, it means miners have never sold any of their BTC.

Source: ARK Invest and Glassnode

To check for Bitcoin’s economic position, the Cointime Economics also considers the nominal and adjusted inflation rate. By definition, the inflation rate is the percentage of new coins divided by the current supply.

Lower inflation rate for BTC

So, in order to explain this, Puell and Check examined what happened with the metrics between 2013, and 2017, and at the time of writing. The conclusion was

“Conversely, from 2013 to 2017, cointime inflation reached parity with nominal inflation, then has surpassed it as of the day of this publication.”

Realistic or not, here’s BTC’s market cap in ETH terms

At press time, the nominal and cointime adjusted inflation rate suggested that inflation was being underestimated. This was because of the slow BTC appreciation, which was much lower than in earlier years.

Source: Ark Invest and Glassnode

While the Bitcoin Cointime Economic is still in its early days, there’s no denying that the metric may offer more insight into market sentiment. Smart money traders may also need to assess other factors alongside the metric to get a full picture of what it offers.
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August 25, 2023
Shiba Inu Flashes Extreme Bearish Signals Despite Shibarium Hype! Can On-chain Momentum Save SHIB Price?

In recent weeks, Shiba Inu has taken the lead in the meme coin market, registering impressive gains and returns. Yet, the sentiment appears to be turning, with SHIB’s price showing signs of a bearish downturn from its peak. Even with the excitement around Shibarium, SHIB’s dedicated blockchain, the token hasn’t met its immediate bullish goals. However, the bullish on-chain trends suggest that SHIB’s bearish phase could be temporary.

Shiba Inu’s Volatility Continues To Increase

In the past three days, Shiba Inu experienced a $3.5 million liquidation following its inability to gain buying interest around the $0.00001 mark. As a result, investors offloaded assets valued at $2.8 million. At present, a solid resistance looms over the $0.00001 level, with few buyers to drive the price upward.

Despite the choppy water, Shiba Inu showcases promising on-chain indicators. While Bitcoin displays low volatility, Shiba Inu’s volatility has been on the rise. Data from IntoTheBlock reveals that SHIB’s volatility has consistently grown over the past month, jumping from 47.3% to 84.4%. This suggests that traders are capitalizing effectively on their entry and exit points. Rising volatility for SHIB signals more trading and interest, potentially driving bullish price surges due to increased buying momentum.

Additionally, Shiba Inu’s MVRV ratio has seen an uptrend over the past week, climbing to 0.548 from a previous low of 0.456. This indicates that SHIB’s market value is surpassing its realized value, a positive indicator for the meme coin.

A rising MVRV ratio implies SHIB traders are offloading their holdings at higher prices. Given the MVRV ratio hovers around the 0.5 mark, it also points to the asset being undervalued, hinting at a potential future price surge.

What’s Next For SHIB Price?

Shiba Inu witnessed a strong rejection near $0.00001, suggesting that buyers failed to defend selling domination near this level. As a result, SHIB’s price declined below 0.038 Fib channel quickly to strengthen selling positions. As of writing, SHIB’s price is trading at $0.0000097, declining over 3% in the last 24 hours.

However, bulls successfully defended against a decline below the support line, with the price stabilizing at a low of $0.0000094. It appears that buyers entered near this dip, viewing it as a lucrative entry point in anticipation of the Shibarium launch.

Currently, bulls are trying to regain their previous momentum, with the SHIB price targeting the EMA20 trend line. If the price rebounds from support and surpasses the $0.00001 mark, it would suggest continued bullish interest at these lower prices. This could send the price to initially aim for $0.000012 and potentially approach the resistance at $0.000014.

Conversely, if the bulls cannot maintain buying demand, the SHIB price might experience a decline below the support line. A drop below $0.000009 would push the price towards a consolidation around $0.0000083, where it might remain for an extended period until Shibarium is launched.

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August 16, 2023
Litecoin Shows Bullish On-chain Metrics Amid Bearish Post-Halving Trend! Will LTC Price Skyrocket Soon?

After the halving event, Litecoin’s value experienced significant volatility, quickly dropping below key support levels. While many anticipated a bullish turnaround for LTC from these bottom positions, it lacked the necessary purchasing momentum. Yet, current on-chain metrics hint at whale players silently making their move, possibly in anticipation of a robust bullish surge in the upcoming weeks.

Litecoin’s Large Transaction Volume Continues To Pump

Recently, Litecoin (LTC) has been making waves with its steadily increasing transaction volume, suggesting a renewed interest among traders. According to IntoTheBlock data, Litecoin’s large transaction volume has been increasing over the last 7 days. The volume has surged from $1.74 billion to $1.84, hinting that whale players are investing in the LTC market near the current dip.

A consistent increase in volume often precedes a bullish trend, as it indicates strong demand and positive sentiment among traders and investors. Moreover, it can trigger a heavy short-liquidation if the LTC price makes an upward surge due to buying pressure.

In addition to the existing positive indicator, there’s another factor that might boost the bullish momentum for Litecoin: the recent behavior of its miners. Data suggests a significant shift in miners’ actions, particularly regarding their selling habits.

Over the past fortnight, there’s been a marked reduction in the outflow from Litecoin miners. Specifically, the metric, which measures the amount of Litecoin being moved out of miners’ wallets, has seen a substantial decline. It plummeted from a peak of $28 million to a much lower $13.7 million.

With fewer Litecoins being sold by miners, there’s a potential tightening of the coin’s supply in the market. A reduced supply, coupled with steady or increasing demand, can exert upward pressure on the price. It’s worth mentioning that the total supply cap for LTC is 84 million, with 73 million Litecoins already in circulation.

What’s Next For LTC Price?

Litecoin faces challenges in initiating a rebound from the robust support level of $80, indicating a lack of buying pressure near higher levels of $85.

The declining 20-day EMA at $82.8 on the 4-hour price chart, coupled with the RSI below the midline suggest that the bears currently dominate. If the LTC price slides and fails to hold above $80, it would hint at a solid downward correction. The next support levels to monitor are $74 followed by $65.

On the flip side, the primary resistance to observe on the upward trajectory is $85, which is the upper hand of the consolidation zone. If the price is driven above $88 by buyers, it could indicate the onset of a more substantial recovery, potentially reaching $97. However, this price point might witness intensified selling pressure.

Past performance suggests hope for bulls. After the 2019 Litecoin halving, LTC surged to $400 in 2021, despite dropping from $66 to $35 in December 2019.

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August 14, 2023
Coinbase’s OnChain Summer Event Caps Off with Coca-Cola NFTs

Coca-Cola is cracking open a new batch of NFTs, showcasing artworks from classic and budding artists. Each digital ‘Masterpiece’ collectible is bubbling inside the renowned Coca-Cola bottle on Coinbase’s Ethereum platform, ‘Base‘.

Coinbase spilled the news about its Coca-Cola NFTs on August 13, unveiling their arrival as a significant element of its multi-week blockchain festival, ‘OnChain Summer’.

ᴏɴᴄʜᴀɪɴ ???? ꜱᴜᴍᴍᴇʀ@CocaCola is bringing their Global Masterpiece campaign onchain with iconic works from leading artists.

Mint now: https://t.co/xTWyI3O7IW pic.twitter.com/9wxFgt8qOh

— Coinbase ????️ (@coinbase) August 13, 2023

Breaking the Seal of Coca-Cola’s Masterpiece NFTs

The Coca-Cola NFTs stir famed artworks like Edvard Munch’s ‘The Scream’ and Johannes Vermeer’s ‘Girl with a Pearl Earing’ alongside emerging creative talents into the renowned Coca-Cola bottle.

Comprising eight contrasting artworks, each piece has previously been featured in Coca-Cola’s Masterpiece Global campaign. Now, they are charting a new course as NFTs, accessible to blockchain art lovers participating in the Onchain Summer event.

This isn’t the first time the soda brand has dipped into the Web3 world. Coca-Cola has its very own digital collection celebrating the LGBTQIA+ community, ‘The Coca Cola Pride Collection‘, joined forces with GMUNK to debut World Cup-themed NFTs on Crypto.com, and more.

Differently, however, its Masterpiece assets are a cocktail of technology, art and social interaction. NFT enthusiasts can also check out OnChain Summer for similar NFT drops, championing art, music, gaming, culture and more.

So, let’s raise our glasses to a summer of renowned revelations and more digital discoveries on the Coinbase network.

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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.

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August 14, 2023
Coca Cola and Friends With Benefits Headline Base’s ‘Onchain Summer’ Web3 Festival

Onchain Summer celebrates the launch of Coinbase’s new layer 2 network, Base, with multiple events each week.

Coca-Cola and popular DAOs like Friends With Benefits and Nouns are participating in different activations.

Let’s face it: non-fungible tokens (NFTs) aren’t having a hot girl summer.

Perhaps “Onchain Summer,” crypto exchange Coinbase’s (COIN) event to celebrate the launch of its native Base network, can help bolster the tokens’ trading volume.

Onchain Summer, which kicked off today in celebration of Base’s mainnet launch, is a series of Web3 activations across art, gaming and music. Through the end of August, over 50 brands, including Coca-Cola, Friends With Benefits, a social decentralized autonomous organization (DAO), and NFT creator platform Zora will host NFT mints on Base network.

In addition to branded NFT offerings, Coinbase is collaborating with Prop House, an incubator linked to NFT project Nouns DAO, to give out over 100 ETH, or $186,000, in grants for developers building on Base. They’re also encouraging developers to enroll in the ETH Global Superhack, an upcoming hackathon that will offer $175,000 in rewards.

To bolster community engagement around Base, Coinbase is encouraging users to bridge their ether to Base in order to mint a free NFT to commemorate the launch of the Base mainnet. According to data from Etherscan, over 125,000 individuals have minted over 30 million free NFTs so far.

In a year where NFT trading volume has fallen almost 50% since January, Web3 projects are struggling to scale. Jesse Pollak, Protocols Lead at Coinbase, told CoinDesk that Onchain Summer aims to showcase how NFTs can be leveraged as a technology rather than just a speculative asset.

“We wanted to give people a reason to be on-chain this summer and set up their first wallet and experience this future,” said Pollak.

Onchain Summer’s first week will feature daily mints, starting with Friends With Benefits, who will issue an NFT on Thursday designed by artist Deekay Kwon alongside pseudonymous NFT collector Cozomo de Medici. On Saturday, Coca-Cola will open a mint of digital artworks from the Masterpiece collection, with works from artists Aket, Fatma Ramadan and Vikram Kushwah, as well as famed painters Edvard Munch, Johannes Vermeer and Vincent van Gogh.

“The world will come on-chain because of great product experiences that people all over the world build,” said Pollak. “That’s where we’re focused on.”

Base is an Ethereum layer 2 network built upon Optimism’s OP Stack. Last week, Coinbase made its Base public launch date official after having opened its mainnet early for developers in July who wanted to begin testing the network. However, during this testing period, an anonymous developer created the infamous BALD token on Base network, which rose to an $85 million market capitalization before plunging when its creator pulled most of the projects’ liquidity, rugging holders. See Also: Coinbase Exec: ‘There’s No Playbook’ for Public Company Launching Blockchain

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August 9, 2023
BTC Bulls Are Back? On-chain Indicators Point to Short-Term Rally
- BTC recorded its highest daily active address count on 2 August.
- The recent increase in network activity, surge in loss-making transactions, and growing negative sentiment are all indicators of a short-term price rally for Bitcoin.
The number of daily active addresses that trade Bitcoin [BTC] has surged in August, reaching a three-month high of 1.07 million on 2 August, data from Santiment showed. Still growing, the number of addresses that have completed BTC transactions today was 1.03 million.

???? #Bitcoin‘s address activity has surged to its highest level in 3.5 months in August. This utility increase, combined with major loss transactions & negative sentiment, is a strong sign that a short-term (at minimum) $BTC price bounce is more probable. https://t.co/5PzjYROX5T pic.twitter.com/G2tevAWdSM

— Santiment (@santimentfeed) August 3, 2023

As the number of daily active BTC addresses increases, the number of transactions involving the cryptocurrency that has resulted in losses has also grown. An examination of the coin’s ratio of daily on-chain transaction volume in profit to loss revealed this.

This indicator measures the value of an asset’s transactions that return profits to the value of its transactions resulting in a loss within a single day. When the indicator logs an uptick and is above the zero line, market participants are making more profits than losses. Conversely, market participants are recording more losses when this metric returns a value below zero.

BTC’s ratio of daily on-chain transaction volume in profit to loss was -0.161 at press time, suggesting that more BTC trades returned losses at the time of writing.

Further, weighted sentiment remains negative as the coin continues to linger in a narrow price range. Per Santiment, BTC’s weighted sentiment was -0.25 at press time.

Source: Santiment

According to Santiment:

“This utility increase, combined with major loss transactions & negative sentiment, is a strong sign that a short-term (at minimum) $BTC price bounce is more probable.”

But is the king coin ready for such a leap?

Finally, a reason to smile?

Despite facing strong resistance at $30,000 and trading in a tight range for the past two months, BTC holders have been reluctant to sell their coins, according to an analysis of exchange activity.

A look at its exchange reserves on a 30-day moving average revealed a 1.4% decline in the last month. This metric tracks the total number of BTCs held within cryptocurrency exchanges.

When the value of BTC’s exchange reserves rises, it indicates higher selling pressure as more coins are being forwarded to exchanges for onward sales. On the other hand, a decline suggests a reduction in BTC distribution and is often a precursor to a price uptick.

Source: Santiment

In addition the declining number of BTC sell-offs, most traders are betting on a price increase.. This is evident from the funding rates on the futures market across leading exchanges, which show that longs outnumber shorts. This is a positive sign, as it suggests that many traders believe that the price of Bitcoin will rise in the short term.

Source: Santiment

While these on-chain indicators hint at a price growth in the short-term, it remains important to pay attention to macro factors that might affect BTC’s price negatively.
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August 8, 2023
Cardano (ADA) Network’s On-Chain Activity Surges Amid Growing DeFi Adoption

Cardano (ADA), a prominent smart contract-based blockchain, has been experiencing a substantial surge in on-chain activity. As the broader digital asset landscape gains mainstream traction worldwide, Cardano’s ecosystem has seen an uptick in DeFi (Decentralized Finance) development, evidenced by the growing adoption of Dapps such as Minswap, Indigo, MuesliSwap, and Liqwid.

However, the network also faces significant regulatory scrutiny in the United States, with the Securities and Exchange Commission (SEC) recently placing ADA on a list of digital assets potentially classified as securities.

Rising On-Chain Activity:

Market intelligence platform Santiment’s on-chain analysis reveals a noteworthy increase in Cardano’s on-chain activity, driven by heightened adoption and participation. Accumulation of ADA by both large investors (sharks and whales) and individual holders has been observed over the past several months.

Notably, investors holding between 100,000 to 10 million ADAs have collectively added $116.1 million worth of coins since May 21 of this year. This surge in accumulation has pushed Cardano’s whales and sharks to their highest level since September 2022.

Transaction Volume Surge:

Cardano’s on-chain transaction volume has been on a steady upward trajectory over the last six months. Santiment highlights consecutive weeks with transaction volumes surpassing 67 billion ADA, marking a notable high not seen since September 2021. This sustained increase in transaction activity underscores the growing utilization of the Cardano network for various purposes.

Price Implications:

Amid the escalating on-chain activities, a pivotal question arises regarding the potential correlation between Cardano’s on-chain performance and its price movement. ADA, currently valued at $13 billion, has maintained stability around 30 cents year-to-date, following a challenging year in 2022 characterized by a decline in value.

Conclusion:

The Cardano (ADA) network’s surge in on-chain activity, coupled with its expanding DeFi ecosystem and the adoption of various Dapps, reflects its growing significance in the blockchain landscape. Despite facing regulatory scrutiny, the network’s increased transaction volume and accumulation by large investors signify a promising trajectory.

As the crypto community speculates on whether the heightened on-chain activities will translate into a price surge for ADA, the cryptocurrency market watches closely to see how Cardano’s journey unfolds in the coming months.

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August 8, 2023
Hunters On-Chain Launches Season 0

Though they still aren’t open to the general public, Hunters On-Chain has decided to move into Season 0, offering a selection of rewards to a very limited number of players.

Hunters On-Chain launches Season 0 of their top-down, action, PvE game. The season lasts for one month, and features a leaderboard with rewards for the top players. Unfortunately, these are the ONLY season perks, and they are only given to the top 10 players.

Supposedly, the team was going to look into expanding the rewards, but we haven’t heard any news on that front. And just the fact that they thought rewarding only the top 10 players for a season was acceptable in the first place makes me wonder about how in touch the team is with the actual gaming community.

And unfortunately (again), this season is a pay to win event. Pretty much all of the ways to earn points for the leaderboards can be boosted by spending more money. You can earn leaderboard points by earning BGEM through playing games, opening up Chests (purchased with BGEM tokens), and upgrading your Hunters. This is all cumulative, so if you have a larger collection of Hunters, you can earn more points. And rarer Hunters as well as those leveled up, earn more BGEM, making this a snowball effect of the rich getting richer. On top of all that, the rewards for Season 0 are BOOM tokens. So the players who already have the highest level Hunters, can level them up some more!

We called out Hunters on-Chain as a game to watch in August. But now we seem to be watching it for all the wrong reasons.

ready to level up

Not a BOOM to be found

Hunters On-Chain also seems to be dropping the ball in regards to their BOOM token. In order to upgrade Hunters in the game, you need the appropriate Hunter shards (found in chests), and BOOM token, which can only be purchased from the in-game store. However, the in-game store has a very limited supply of BOOM tokens and is resupplied randomly and sporadically by the team. And whenever the BOOM supply is refilled, it is bought up within minutes. If you aren’t online at the exact, right time, you can forget about ever getting any BOOM tokens. In fact, this morning’s drop of over 33K BOOM tokens sold out in one minute flat!

Now I realize that trying to balance a PvE economy is difficult. But this random trickle of tokens just doesn’t feel right. Especially when a whale can swoop in and buy up all of the BOOM tokens, level up all of their hunters, and receive even more of an advantage in the game. And, rumors have it that they will stop adding BOOM to the store all together in the near future. At which point I have no idea how players will level-up their hunters.

The team did airdrop some BOOM tokens onto holders of Genesis Hunters. However, as owner of three Uncommon Hunters and one Rare Hunter, the amount of BOOM I received was not even enough to level up one Uncommon Hunter to level 2.

Boomland is going to need to figure this out sooner rather than later. At this point, it’s starting to feel like they ported their web2 game over to web3, without any real strong idea of what they were getting into.

What is Hunters On-Chain

Hunters is a fantasy, top-down, PVE action game with a couple of different game modes.

For PvE, each match features four players fighting monsters and leveling up. In Hunt mode, matches last for two minutes, with the top spot going to whoever has earned the most experience in that time, or whoever is the last survivor — whichever comes first. Each player starts the match at level 1 with full hit points. As they kill monsters and grab the stars that drop, players gain experience. Gain enough experience, and you level up, earning the right to choose between two, semi-random promotions. These promotions include standard power-ups such as increased damage, greater attack range, and more hit points, as well as special abilities like Damage Reflect and Demon Pact (sacrifice HP for more damage).

As the match goes on, the monsters spawned get tougher. So just trying to hide and survive the match isn’t really a viable tactic. Players need to actively get out on the battlefield and increase their levels. Monsters generally spawn in the corners of the map, though they will chase players all around. At the center lies a healing square that can be visited at any time.

Other modes include Boss Hunt, which requires players to try and defeat a Boss dragon after leveling up, and Bounty Hunter, which is a 10 character, FFA fight with no level-ups during the match.

Players can earn BGEM tokens from playing matches. They can then use BGEM to purchase chests containing random artifacts and hunter shards. Players also need BOOM tokens to level up their Hunters.

To learn more about Boomland and Hunters on-Chain, visit the Boomland website, follow them on Twitter, and join their Discord.

Phil Hall has been a gaming enthusiast since birth and a crypto enthusiast since 2017. He enjoys new discoveries and sharing those with others via blogging and photography. You can follow him on Twitter or read his other articles on Medium.

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August 4, 2023
Litecoin (LTC) Price Gains Momentum: On-Chain Activity Surges Ahead of Halving Event

Santiment, a prominent cryptocurrency analytics platform, reported that as the highly anticipated Litecoin halving event approaches on Wednesday, key traders who hold positions ranging from $9.5k to $950k worth of LTC are engaging in aggressive accumulation.

As history suggests, this reduction in supply and the potential increase in demand could have logical implications.

According to the Litecoin calendar, the upcoming halving event is scheduled for August 2 at 17:25 GMT and this event will occur on block 2,140,000, causing the mining reward for Litecoin to decrease from 12.5 LTC to 6.25 LTC.

Similar to Bitcoin, Litecoin experiences halving events every four years. During a halving, the number of Litecoins generated with each block mined is halved.

Santiment’s previous report reveals that big holders of Litecoin, known as whales, have been contributing to the surge in trading volumes. They have been actively adding to their LTC holdings, with addresses holding between 100,000 and 1 million LTC now owning over 35% of the total supply. In total, these whales have increased their holdings by $59 million.

The recent increase in on-chain activity for Litecoin, combined with the excitement surrounding the upcoming halving event, indicates a promising outlook for LTC.

Litecoin’s active addresses have been steadily increasing since April, reaching a significant milestone of 8.5 million last week, as reported by IntoTheBlock. At the time of writing, Litecoin is trading at $94 and is up by more than four percent.

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August 3, 2023
Key On-Chain Metric Points to Stagnation, Will Ethereum Ever Break $2,000?

According to Etherscan data, the number of active ERC-20 addresses has not changed much in 2023. It has stayed between 200,000 and 300,000 while Ethereum prices stagnate below July 2023 highs. As of August 2, there were about 275,000 active ERC-20 addresses, up from 156,000 on June 18. Although activity has been low overall, there was a significant increase on June 11, with over 446,000 active ERC-20 addresses.

Active ERC-20 Addresses: Etherscan

Ethereum’s price trajectory has been tumultuous in tandem with this activity pattern, looking at the charts. For instance, Ethereum bulls have failed to breach the $2,100 liquidation level posted in the latter stages of H1 2023.

Ethereum Prices Volatile, Few Coins Burned

At the moment, ETH prices hover around the $1,800 range, teetering precariously and likely to drop, looking at candlestick arrangements in the daily chart. Although Ethereum has been bullish in the past two months, bulls have been tamed, and a drop below the $1,800 level may signal a shift from bullish to bearish in the medium term.

ETH price on August 2| Source: ETHUSDT on Binance, TradingView

With ETH under pressure, the number of active ERC-20 addresses remains constant and relatively lower than the 2021 peaks. This means there is less demand for ETH, which is used to pay transaction fees. As a result, gas fees are lower because there is less competition for block space. Typically, this would encourage more people to participate and even deploy complex contracts in decentralized finance (DeFi).

With EIP-1559 in the equation, low activity means fewer coins are taken out of circulation. Despite low network activity, the protocol continues to issue 2 ETH after each validated block, watering down deflationary effects enforced by EIP-1559.

DeFi Activities Falling

Falling activity could be attributed to the waning interest in decentralized finance (DeFi) activities over recent months. As of August 2, the total value locked (TVL) remains below $50 billion, with a significant portion of assets tied in Ethereum. DeFi projects like LidoDAO, Curve, and Uniswap facilitate the trading of ERC-20 tokens.

Furthermore, on-chain data highlights USDT as the most actively transacted token. Given its position as the third-largest coin by market cap, with substantial circulation in Ethereum and Tron networks, such a trend is expected.

Looking back at ERC-20 transactions from June and July, it is evident that transfers stayed constant despite temporary price increases. Ethereum prices rose from $1,630 to $2,000 between mid-June and mid-July 2023, but ETH is now lower.

On-chain ERC-20 activity has remained stable despite price volatility. It’s unclear whether there will be a change in activity as prices continue to drop. However, lower prices may force token holders to wait and see, leading to less activity.

Feature image from Canva, chart from TradingView

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August 2, 2023