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On-Chain Volume of Bitcoin and Ethereum Falls to New Lows

The combined on-chain volume of Bitcoin and Ethereum fell by almost 50% in December, according to data from The Block's research.

Ethereum and Bitcoin Logo
Ethereum and Bitcoin Logo

This represents a drop of 44.6% to $144 billion. Adjusted on-chain volume measures the economic flow of ETH and BTC on their respective blockchains, with adjustments made to eliminate spam transactions and give a clearer view of market conditions.

In December, Bitcoin's total adjusted on-chain volume decreased by 41.1%, from $5.4 billion in November to $3.22 billion. Ethereum saw a steeper drop of 49.8%, falling from $3.64 billion in November to $2.22 billion. These numbers have declined since May, which saw a 92.7% increase from the previous month. This was also the first time Ethereum's on-chain volume surpassed Bitcoin's.

Ethereum Sees Decline in Staking Revenue and Future Volumes

Ethereum recorded a 9.6% drop in ETH staking revenue, down to $80.3 million. In contrast, Bitcoin miner revenue saw a more modest decrease of 0.9% to $476.7 million. Bitcoin and Ethereum also saw declines in open interest and monthly futures volumes and options, with drops of more than 30% for both assets. Ethereum saw a larger drop than Bitcoin in these categories.

NFT Marketplace Volume Increases for Ethereum

The only growth area for Ethereum was in NFT marketplace volume, which increased by 5.2% from the previous month to reach $401 million.

Further Analysis of the On-Chain Volume Decline

The drop in on-chain volume for both Bitcoin and Ethereum in December may be partly attributed to the ongoing effects of the demise of FTX and Alameda Research. However, it is worth noting that the on-chain volume for both assets had been steadily declining since May, even before the impact of these events.

It is also worth considering that on-chain volume is just one metric for analyzing the performance of cryptocurrencies. Other factors, such as price movements, adoption and usage, and development of the underlying technology, may also impact these assets' overall health and success.

Implications for Investors and Traders

The decline in on-chain volume for Bitcoin and Ethereum may concern some investors and traders. However, it is important to remember that the cryptocurrency market is highly volatile and subject to frequent changes. As such, it is always important for investors to carefully consider their risk tolerance and diversify their portfolios to spread risk. It is also crucial to stay current on market conditions and developments in the cryptocurrency industry.