A powerful short squeeze is moving into the cryptocurrency market. This is the conclusion reached by analysts at Glassnode. According to them, a strong divergence between the value of assets and their on-chain activity suggests that the accumulation phase is ending, and the market is preparing for a new rally.
The rise in the price of cryptocurrencies despite weak on-chain activity may hint at the completion of the accumulation of coins.
Ethereum fees continue to rise despite the overall on-chain downturn.
Transaction volumes have on average pulled back 30% from their April highs.
For example, the number of active addresses on the bitcoin network is currently about 275 thousand per day. This, as seen in the chart below, is ~ 35% below the January peak.
The same drop was seen with ether. Despite the fact that there are many more active daily addresses on the Ethereum network (450 thousand), this is still 33% lower than the May peak. The current activity on both networks is similar to “a stable range of savings before the bull period,” says Glassnode.
Network transactions also show a decrease in activity. For example, Bitcoin’s activity has been reduced from 37.5% highs to 200 thousand transactions per day. In the Ethereum network, the volume reduction was 26.6% to 1.1 million transactions per day.
Ethereum is tearing patterns again
At the same time, due to the decrease in the number of transactions, commission costs have also decreased. Currently, the total commission on the Bitcoin network paid to miners (excluding block mining rewards) averages 21 BTC per day. At the same time, the commission for one transaction averages 0.000051 BTC ~ ($ 2.4).
However, in the case of Ethereum, the situation looks different. Here the volume of commissions is falling, but the average check, on the contrary, is growing. This, according to experts, may be due to the high demand for non-fungible tokens (NFT) . At the time of this writing, the total daily commissions in the Ethereum network amounted to 10 thousand ETH ($ 32.4 million).
Experts admit that such a strong divergence between the price of an asset and its on-chain activity has historically been abnormal for a full-blown bull market. However, it is not uncommon to warm up before a rally or short squeeze coin offerings. In general, according to Glassnode, such periods often accompany the end of the accumulation of coins in a bear market and the beginning of a bull rally.