Amid the global market rout, Bitcoin transactions have dropped significantly in the past month to levels not seen since December 2018.
Bitcoin is seeing a declining hashrate and mining profitability in the past month, but it seems that usage on the network is declining as well.
Activity on Bitcoin Drops to December 2018 Levels
The leading cryptocurrency is seeing a significant drop in usage as the global health crisis continues to drag on. With users strapped for income and cash, risk-on assets like Bitcoin are seeing declining transactions. The drop has been significant and now sits at levels not seen since December 2018.
The slipping transaction numbers were recently highlighted by Mati Greenspan (@MatiGreenspan):
Explanations for the decline are numerous. Some are claiming that during this difficult time, many are opting for merely HODL’ing as they face more pressing concerns in their real lives. However, others maintain that Bitcoin has become something of a minor sideshow in the face of greater global calamity.
Still, others see it as an indication that we could still experience even further dips in prices soon. In other words, the drop in transactions is a lagging indicator of a more bearish movement coming to the markets.
Holding on Above $6,000
Despite suffering a drastic drop three weeks ago which saw the price decline some -40%, Bitcoin has managed to regain some ground. It is now safely trading above the $6,000 price point, currently at $6,350.
However, some indicators still pose a problem for the leading cryptocurrency. For example, the hashrate has fallen some 40% for the month of March and many miners are being forced to close up shop due to low profitability. There is some speculation that the price decline in March was caused by miners selling off their mining rewards. Others maintain that the price decline was intensified by the PlusToken scam.
Still, we will have to wait and see whether or not this current rally is legitimate. According to the Fear and Greed Index, the cryptocurrency market is still at levels of ‘extreme fear.’ In fact, the entire market has maintained this level of fear for much of the month of March. If the global market rout continues, we could see Bitcoin drop further as HODL’rs become desperate to pay bills and need to cash out. In short, the future remains dreadfully uncertain.