Can Bitcoin’s struggles and volatility of Q3 overshadow BTC’s Q4 performance

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The third quar­ter (Q3) of 2022 has been one filled with intense scruti­ny of cryp­to assets with Bit­coin [BTC] at the heart of it. The king of cryp­to asset, recent­ly, wit­nessed a dip in its trac­tions due to devel­op­ments on major blockchains such as Ethereum [ETH] and Car­dano [ADA].

How­ev­er, BTC still remains the largest mar­ket cap cryp­to asset by a coun­try mile. While the coin’s price dipped again in the pre­vi­ous quar­ter, anoth­er strange pat­tern was observed from the on-chain data.

Old BTC, new story

BTC wit­nessed a price slide in recent months on the back of sus­tained macro pres­sure. Anoth­er major sell-off was ini­ti­at­ed last week after the Ethereum Merge was launched. How­ev­er, in light of these events BTC wit­nessed a down­ward volatil­i­ty trend. The aver­age 30-day volatil­i­ty for August 2022 saw a 20% dip from the 80% observed in June.

Source: Mes­sari

One of the fore­most impact of decreas­ing volatil­i­ty of Bit­coin prices was point­ed out by Mes­sari in a recent report. A low­er Bit­coin volatil­i­ty result­ed in low­er liq­ui­da­tions across the larg­er cryp­to market.

In total, long liq­ui­da­tions in August 2022 amount­ed to over $5 bil­lion, which is less than half as seen in June ($10.8 bil­lion). The total short liq­ui­da­tions were also sig­nif­i­cant­ly low­er. Dur­ing August, short liq­ui­da­tions record­ed around $3.5 bil­lion as com­pared to over $6.6 bil­lion in June.

Source: Mes­sari

A network conundrum

With the shifts in place, the BTC net­work also under­went cer­tain tran­si­tions in the pre­vi­ous quar­ter. Addi­tion­al­ly, there has also been a slow­down in fund­ed address­es for the net­work. In Q3 2022, fund­ed address­es only grew by 1.1% com­pared to 2.5% in Q2 2022. More­over, the num­ber of fund­ed address­es expe­ri­enced its first decline in August 2022 after 10 months of growth.

The net­work also wit­nessed a 4% dip in aver­age dai­ly active address­es that clocked at 890,000 as com­pared to Q2 2022. How­ev­er, Mes­sari stat­ed that,

“Active address­es seem to have returned to their base­line of activ­i­ty, after the cycle peaked in Q4 2021 along with the prices.”

Source: Mes­sari

One sim­i­lar sto­ry for BTC from the pre­vi­ous quar­ter was that dai­ly trans­ac­tions large­ly remained unchanged. In fact, they con­tin­ued to record over 250,000 dai­ly trans­ac­tions over the year. How­ev­er, a dip was seen in aver­age trans­ac­tion fees as the aver­age fee per trans­ac­tion dropped by 21% to $1.4.

Source: Mes­sari

At the time of writ­ing, BTC stood in a state of intense spec­u­la­tion in the cryp­to com­mu­ni­ty over its future. The BTC price also exchanged hands below $18,900 with sell­ers hav­ing the upper hand for the past week now.

This move­ment put BTC’s week­ly loss­es at 7% as it strug­gles in the bear market.

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