Bitcoin On-Chain Activity Declines and BTC Miners Get the Hard Hit

The Bitcoin on-chain activity has declined, rendering long-term investors worried again

Bitcoin's price has again dropped below US$19,000, but experts predicted that the price will continue to rise in the emerging months. The fluctuating prices indicate that since the launch of the Ethereum Merge upgrade, the volatility in the market has heightened extensively. The crypto stayed resilient even when the Fed announced a rate hike to curb the effects of the ongoing inflation in the US markets. But unfortunately, the Bitcoin price took a nosedive to US$18k, causing investors to speculate about their investments once again. Initially, the token's value plummeted due to various macroeconomic issues, including high inflation levels, leading to the destabilization of the economic markets. Currently, since the crypto's price declined, the Bitcoin on-chain activity has also started to plummet. The Bitcoin on-chain activity has been pretty high over the past several months, until the Ethereum Merge launch. But it seems like as the excitement and speculations lowered, so have the investors' interest to spend time trading cryptocurrencies.

Key indicators and analysts have stated that the on-chain activity of almost all cryptocurrencies rose over the past several weeks before ETH 2.0 came live. Even though the network upgrade did not take place on the BTC network, it was still a pretty huge event in the history of the crypto market. Hence, it led to a significant rise in the activities of all the crypto networks. But now as the Merge is already on here, investors have once again retracted themselves from trading, buying, or selling cryptocurrencies. Bitcoin being the flagship cryptocurrency is generally expected to support the crypto ecosystem, but as even the Bitcoin on-chain activity declines, investors are afraid of further bearish market trends.

Bitcoin Miners are at the Receiving End of the Worst

Reports claim that for the first time in the last two months, the Bitcoin mining difficulty declined, which is why Bitcoin miners were at the receiving end of huge profits. But this rally was short-lived as the market was once again hit by bearish market trends. The miners have been facing this hit for a long time now. They continue to shift networks to generate mining profits, but unfortunately, the expenses that go into mining are pretty high, and now with the continuous bearish market trends, they are unable to afford crypto mining altogether.

Bitcoin's declination in the on-chain activity is also due to its generating market dominance. Crypto investors have been closely monitoring the monetary policies that are affecting the stock markets, and now since the crypto market has, unfortunately, correlated itself with the mainstream economic markets, investors get an idea about the future price movements of Bitcoin and other cryptocurrencies. But despite falling below the expectations of the investors, experts and BTC optimists still believe that the crypto will rise above US$100,000 if not 2022, but surely by Q1 of 2023.

Bottom Line

There might be several reasons behind the declination of the Bitcoin on-chain activity, including increased volatility in its market value. But long-term BTC investors are quite well-versed with this volatility. Potential investors are currently looking to buy the dips and this might be the perfect opportunity for them to tread the crypto waters, however, experts believe earning profits will only be possible by directly investing in Bitcoin, in the coming months. Changing consensus mechanisms and protocols will eventually render mining to be of lesser priority in the coming months.