On-chain statistics for May, as reported by Goldman Sachs, reveal a conflicted scenario for the adoption of bitcoin (BTC) and ether (ETH). While changes to ether balances across cohort groups have remained steady, a significant monthly drop of 31% has been observed in bitcoin addresses with balances exceeding 100,000 BTC.
The spent output profit ratio (SOPR) for bitcoin, a key factor in determining realized profit, experienced a series of spikes throughout the month, reaching heights unseen since December 2020. This trend suggests that substantial profit taking has occurred in the spot market.
In contrast, the amount of bitcoin held on exchanges witnessed a sharp 12% decline, with the supply of ether exhibiting a small gain. The Wall Street behemoth emphasizes network congestion on both the Bitcoin and Ethereum blockchains in May as a pivotal factor. The sheer volume of transactions led to increased fees, which consequently deterred user activity, causing monthly address activity for bitcoin and ether to tumble by 13.8% and 16.7% respectively.
On the other hand, the bitcoin average mean hash rate—a measure of the total computational power used to mine and process transactions on proof-of-work blockchains like Bitcoin—surpassed its all-time high in May, growing 5.4% over the month. Additionally, miner revenues enjoyed a 16.4% increase.
While the situation may appear paradoxical, the fluctuating on-chain statistics demonstrate the complex relationship between the Bitcoin and Ethereum networks. The continuing growth of the bitcoin hash rate, despite sagging prices and declining exchange holdings, could be construed as evidence of faith in the blockchain’s long-term prospects. Meanwhile, the continuous congestion of both networks compounded by surging transaction fees signals the urgent need for scalability solutions.
In conclusion, the May on-chain statistics paint a confusing portrait of bitcoin and ether adoption. Despite concerns surrounding network congestion and high transaction fees, the bitcoin hash rate’s persistence and upturn in miner revenues suggest optimism for the future of the digital currency. However, as users continue to be deterred by prohibitive fees, improvements to the network’s scalability will be crucial in sustaining long-term growth for both Bitcoin and Ethereum.
Source: Coindesk
