Bitcoin’s Q1 paradox: Prices up by 69%, but not all good news because…

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    BTC’s price rose by 69% in Q1.
    However, during the same period, its blockchain witnessed a decline in activity.

During the first quarter, there was a noticeable decrease in Bitcoin (BTC) network activity, according to a recent study by Messari, even as the value of its cryptocurrency coins surged.

According to the Q1 2024 report by the on-chain data provider, there was a decrease in the desire or need for the Bitcoin network over the past three months.

Approximately 895,000 unique addresses carried out at least one transaction each day on the blockchain over the past three months. This figure is 5% lower than the 937,000 daily active addresses reported in Q4 of 2023 for the Bitcoin network.

During the reviewed quarter, the decrease in the number of active addresses on the blockchain led to fewer transactions being processed. As reported by Messari, there was a daily decrease of about 15.3% in transaction volume.

Commenting on what might have been responsible for the decline in network activity, Messari said: 

Based on the modifications, it seems that the decrease in transactions could be due to fewer activities from automated accounts or power users, who frequently engage in transactions and significantly contribute to the platform’s activity.

Because fewer transactions occurred on the network during the reviewed quarter, the average fee earned from each transaction dropped as well. The total fees generated by the Bitcoin network decreased by a significant 42% during this timeframe.

Some wins to its name 

During the first three months of the year, Bitcoin’s value experienced a substantial increase. The price of the coin climbed up to 69% from its starting point on New Year’s Day, reaching $71,310 by the end of March. This quarter also marked a new record high for Bitcoin’s value.

Messari stated that the approved spot Bitcoin ETFs, which became available in January, significantly contributed to the observed price increase. In the first quarter alone, these 11 ETF providers experienced a total inflow of $12.04 billion.

The quarter was also marked by an increase in block size due to inscription-related activity.

Read Bitcoin’s [BTC] Price Prediction 2024-25

According to Messari:

More recently, on March 2, 2024, Marathon mined a block with a size of 3.99 MB. Subsequently, F2Pool mined a block with a size of 3.97 MB on March 30, 2024.

In terms of network security for Bitcoin, the hashrate grew by 19% between the previous and current quarters. Currently, the hashrate stands at approximately 688.8973Eh/s, marking a 16% increase since April’s start, as indicated by BitInfoCharts statistics.

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2024-04-10 03:03