Holders Accumulate, Blockchain Activity Decreases In Both Bitcoin And Ethereum

Bear markets are characterized by holders who show unwavering faith and accumulate. This is the other side of that is a decrease in the “willingness to spend” or use the assets. The Latest Intotheblock Report “highlights the diverging pictures between on-chain demand and accumulation of the largest two crypto-assets.” Some people still have trouble admitting we’re currently in a bear market, but the signs are everywhere.

It makes no sense to transfer your money when your goal is to accumulate. It doesn’t make sense. The entire situation described by Intotheblock makes sense, however.

Decreased Blockchain Activity

According to the report, this month had “the lowest on-chain activity in years.” Let’s examine the indications that Intotheblock identified, and then we’ll get to holders and their need to accumulate.

  • “Network fees for Bitcoin and Ethereum reached multi-year lows.”

This is one the most obvious and easy-to-determine indicators. Especially in Ethereum, since that blockchain’s main characteristic is that fees rise with usage. The NFT market has become stagnant, and DeFi activity has declined. It seems like an ideal time to hold onto what you can. 

  • “Network fees paid to use Ethereum reached their lowest in two years.”

The controversial Ethereum uses a percentage of every transaction’s gas fee to pay EIP-1559. If people aren’t using the network as much, the burning decreases but the issuance stars the same. “At these fee levels, Ether would be inflationary even following the merge’s 90% issuance reduction,” Intotheblock informs.

  • “Bitcoin recorded modest outflows from centralized exchanges, while Ether saw relatively larger amounts of nearly half a billion being withdrawn.”

This indicator is usually called “Exchanges Netflows” and refers to “the net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges.” Both bitcoin and ether are flowing out of the exchanges and into cold storage, “a pattern that had occurred on previous bear markets.”

ETHUSD price chart for 08/29/2022 - TradingView

ETH price chart 08/29/2022 at Coinbase. Source: ETH/USD tradingview.com| Source: ETH/USD on TradingView.com

Are Holders accumulating because The Merge is Coming?

It will mark a significant change in the Ethereum network’s approach to proof-of-work. Crypto people are evidently interested in the merge, in fact, it was the main driver for ether’s high performance of late. However, the rest of society seems unaware. 

  • “New addresses created on Ethereum reached their lowest levels since 2020 before DeFi summer.”

New users don’t know about the merge, so they’re not flocking to Ethereum to try to make a buck through the highly-anticipated transition. Oder flocking to Ethereum. 

  • “In spite of the upcoming milestone, relatively few people are searching for Ethereum.”

While holders accumulate, search intention for “ethereum” is as low as all the other indicators. This isn’t necessarily a bad sign, we’re in a bear market after all. However, it speaks to the relative importance of the merger for the population. 

Holders Accumulate In A Big Way

Why does Intotheblock’s report focuses on ethereum in the blockchain activity decrease part and on bitcoin in the holder accumulate part? It’s curious, to say the least. “The consistent accumulation in bear markets reflects the strong commitment and long-term conviction many holders have in crypto,” the report says. The only thing they were able to pull is bitcoin data.

  • “Hodlers’ balance reached a new high of 12.92 million BTC.”

That’s right, an ever-increasing number of BTC is in people with high conviction hands. The implications this might have on the future price of the only scarce coin can’t be overstated.  

  • “60% of all Bitcoin now owned by addresses that have been holding for over a year.”

Yet another stat. Same message. Bitcoin hodlers, on the other hand, accumulate bitcoins. Many of these hodlers seem all-in on the trade. How will this affect bitcoin’s price as supply keeps decreasing halving after halving?

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