Despite the recent 15 percent rebound in Bitcoin prices, measurements indicate that additional network demand would be required to support further price gains.
According to Glassnode, for Bitcoin (BTC) to continue its recent price rebound, there need to be more demand and network fees invested, as several on-chain measures are still in a bearish area.
The blockchain monitoring company Glassnode reported on Monday in its most recent “The Week On Chain” report that market growth over the previous week had been only moderate.
In it, researchers cited factors that should calm investors’ euphoria over the 15% increase in BTC price over the last week, including sideways growth in transactional demand, active Bitcoin addresses continuing in “a well defined.
A reduction in on-chain activity and a shift from speculative investors to long-term holders are two characteristics of a bear market that are highlighted in the report’s opening paragraphs. It implies that each feature is still present in the Bitcoin network.
According to Glassnode, a reduction in network activity can be attributed to speculative traders’ lack of new demand for the network as opposed to long-term holders’ (LTHs) and investors’ strong faith in the network’s technology. The study claims:
“With exception of a few activity spikes higher during major capitulation events, the current network activity suggests that there remains little influx of new demand as yet.”
The additional demand required to support future price increases is not apparent, in contrast to last week when a considerable demand appeared to be established at the $20,000 level for BTC and setting a floor. The gradual decrease of active addresses, which has been going on effectively since last December, is what Glassnode calls a “low bear market demand profile.”
The investigation found similarities when comparing the current network demand pattern to that formed during the 2018–2019 timeframe. After the April 2021 BTC price reached its all-time high, network demand dwindled similarly to the previous cycle. As prices increased to a new ATH in November of that year, there was a noticeable improvement in demand.
Demand, however, has been trending downward since last November, with a significant jump in May’s big sell-offs:
“The Bitcoin network remains HODLer dominated, and as yet, there has not been any noteworthy return of new demand.”
The lack of demand from users other than ardent Bitcoin fans, according to Glassnode, is pushing network costs into “bear market territory.” Daily costs were just 13.4 BTC during the past week. In contrast, daily network costs exceeded 200 BTC when prices reached their ATH in April.
Assuming fee rates climb noticeably, Glassnode contends that this could indicate rising demand, supporting a further “positive structural shift” in the Bitcoin network’s activity:
Although we have not yet noticed a noticeable fee increase, monitoring this statistic is likely to indicate recovery.