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The phrase “gradually then suddenly” has been abused in the cryptocurrency industry to emphasize the importance of each step towards regulatory support and institutional interest.
But it’s still not a case of “suddenly”. We are still in the “gradual” phase. Each month brings advances that seemed important at the time, but in the grand scheme of market evolution we are still at the beginning. We left the starting block, for sure. But we are not even a quarter of the way.
In CoinDesk Research’s latest monthly report, we take a brief look at the advances of bitcoin and ether (ETH), the two largest cryptocurrencies by market cap, made in October, as well as some of the stories their on-chain metrics tell us. they are telling. Momentum is building up, as demonstrated by growing congestion in the Bitcoin network and technological evolution – Eth 2.0 – in Ethereum. And the use case of each is gradually becoming clearer as market and on-chain metrics begin to paint a more detailed picture.
While BTC’s volatility was broadly unchanged throughout October, ETH’s volatility has declined. This is likely an adjustment from the jump in September, when ETH’s 30-day volatility increased by a significantly larger amount than BTC, as seen from the spike and then the fall in the ETH / BTC volatility ratio blue). This underscores that the ETH market is even more immature than BTC’s and could imply that the pending change in ETH’s technology foundation is adding a level of uncertainty to an evolving market.
Looking at the average block weight (dark blue line), we can see that Bitcoin’s blocks have been nearing full capacity for the longest period since May. This can also be seen in the peak of the mean time between blocks (green line). Network congestion is a common feature of price hikes and usually results in higher transaction fees. This more recent congestion, however, has resulted in a much higher fee spike than in May, even when the rise in the US dollar price is left out of the equation, suggesting greater demand for transaction processing.
Average transaction fees on Ethereum fell by more than 80% in October, retracing the sharp increase in September. The percentage of miners’ revenue from fees also dropped dramatically from a high of 75% in September to 30% by the end of October. Both metrics suggest less user and dapp activity on Ethereum as the hype around decentralized finance (DeFi) applications begins to decline. This is a positive sign for the network, which in recent months has been pushed to the limit by the showy weak of new DeFi assets such as COMP, SUSHI and others.
