The fundamentals of the Bitcoin and Ethereum networks appear to remain strong despite the recent drop in prices.
The hash rate of both has recently reached a new record high.
The number of active addresses and those holding more than 1,000 BTCs is also on the rise.
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Bitcoin and Ethereum still appear to have strong fundamentals despite the recent drop in prices. Both networks have just reached record hash rates and it seems that their use is increasing.
The hash rate is reaching record highs while BTC and ETH prices are declining, losing some of their gains so far in 2021. Clearly, price volatility has not deterred miners from supporting either of these two networks.
Crypto prices are falling but fundamentals remain strong
The first two weeks of 2021 were a roller coaster ride for investors in crypto-currency. Bitcoin and Ethereum both started the year by continuing on their rallies that began in late 2020.
Bitcoin broke the $30,000 mark on January 2 and continued to climb until reaching a new historical high on January 8, just under $42,000. Meanwhile, ETH reached a high of about $1,350 after opening the new year at less than $750.
However, the upward momentum came to a sudden halt on Sunday, January 10. By Monday, January 11, the BTC had fallen to about $31,700 and ETH was trading below $1,000 again.
Despite a 25% drop in prices, the fundamentals of the networks remain solid. As reported in the weekly „State of the Network“ report by Coin Metrics, some measures of the strength of cryptomoney continued to increase.
In particular, the hash rates of Bitcoin and Ethereum have reached record levels. The hash rate refers to the combined power of all mining equipment securing a blockchain network.
An increasing hash rate indicates that miners continue to deploy equipment on the network in the hope of future profits. This suggests that both Bitcoin and Ethereum miners remain confident, even in the face of a significant drop in prices.
Bitcoin and Ethereum hash rates are both at all-time highs.
Read more in this week’s State of the Network:https://t.co/728k0Ueshl pic.twitter.com/nYjrAXT9e1
– CoinMetrics.io (@coinmetrics) January 12, 2021
The increase in Bitcoin’s hash rate appears likely to continue, with major operations planned for expansion this year. As BeInCrypto has already reported, several U.S. mining companies have recently placed massive orders with the mining platform manufacturer Bitmain.
The equipment that Marathon Patent Group and Core Scientific have ordered will not arrive before the end of the year. This delivery will significantly expand each company’s existing operations.
The active addresses of Bitcoin and Ethereum are also on the rise.
In addition to hash rates at their highest level to date, the Coin Metrics report also highlights the growth of active BTC network addresses such as ETH. The number of addresses trading on both networks is approaching the highs set during the bull market of 2017.
However, Coin Metrics points out that active addresses do not provide a clear picture of the growth in network usage. This is due to the fact that many users of cryptosystems prefer to use multiple addresses. An address does not necessarily correspond to a single user.
However, the research company wrote :
„Bearing this in mind, active addresses are nevertheless a good indirect indication of overall usage. The increase in active addresses for the BTC and ETH indicates that on-chain activity is increasing for both networks“.
In addition, Coin Metrics points to an increase in the number of addresses holding 1,000 or more BTCs. Used as an indicator of Bitcoin’s institutional adoption, these „whale“ addresses have increased significantly since the beginning of 2021.
Inspired by Michael Saylor’s purchases of BTCs for his company MicroStrategy, the end of 2020 saw several financial institutions and companies taking a position in the Bitcoin market. Many industry observers expect this trend to continue into 2021.
MicroStrategy will host an online event next month entitled „Bitcoin and Corporations“. The business analytics company will explain how it has taken