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Bitcoin On-Chain Activity Turns Green, Will Price Action Follow?

Bitcoin On-Chain Activity Turns Green, Will Price Action Follow?

Bitcoin on-chain activity has turned green again, signaling good news for the digital asset. Overall, the metrics have risen, with some reaching double-digit gains in the last week alone. Recovery has ranged from miners’ daily earnings to royalty income, as well as the hourly rate of block production. This is a welcome change after the last two weeks of flat on-chain activity.

Bitcoin metrics are green

There was a significant drop in on-chain activity in the last two weeks alone. This was concerning given that Bitcoin’s on-chain activity had increased prior to this. However, the last week has shown that the cryptocurrency is just as capable of a quick recovery as it is of a crash.

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Miners’ daily earnings increased by 5.88% in the last seven days. This had seen revenue fall from $37,202,998 in the second week of April to $39,390,213 in the third week of the month. This also coincided with the increase in the average charges per day registered during the same period. It had gone from $362,733 to $391,510, a variation of 7.93% in the space of a week.

Despite this increase in per day fees, fees only made up about 1% of all miner revenue, meaning fee revenue is now near an all-time low.

Bitcoin hash rate recovers | Source: Arcane Research

Block production also increased. The target block production rate was 6 blocks per hour, but was quickly exceeded by reaching an average of 6.45 blocks per hour. This would mean that for the block production rate to return to normal, the mining difficulty would need to be adjusted by around 5%, which should happen on Wednesday.

Daily trading volume had seen the strongest recovery, rising to double digits. The growth translated into a variation of 10.99% in a period of 7 days. Miners were also able to integrate more transactions per block due to the higher block production rate, which contributed to transaction volume growth.

Will the price move with it?

The issue of price movements will always be there, and with on-chain metrics turning green, it can easily affect the price of the digital asset. The question is whether the movement would be positive or negative.

BTC starts another recovery trend | Source: BTCUSD on TradingView.com

Historically, when on-chain activity turned green, the price of bitcoin was known to go up with it. This can usually be related to higher network usage, leading to higher prices.

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This is already the case as the bitcoin price has already started to recover from its lows on Tuesday. The $36,000-$38,000 support level held up quite well and in early Wednesday hours, BTC price is now trading above $39,000. If on-chain activity continues to grow, Bitcoin could well break above $40,000 before the end of the week.

Featured image from Coincu News, Arcane Research charts and TradingView.com

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