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Bitcoin on-chain activity was lit up like a Christmas tree in the weeks leading up to the Ethereum merger. While the upgrade did not take place on the bitcoin network, it was still significant for the crypto space, leading to increased activity across several networks. However, now that the merge has been completed and dusted, network activity is beginning to retreat to “normal” levels, leading to a decline in on-chain activity.
Bitcoin Mining Hashrate Drops
Bitcoin mining difficulty was downgraded for the first time in two months. This down 2.1% difficulty adjustment kept the block production rate low at 5.94 blocks produced per hour. It coincided with the bitcoin hash rate hitting a new record before registering a reversal.
Nevertheless, the difficult adjustment is good news for bitcoin miners who have seen their earnings plummet in the past week. The average transaction per block decreased by 1.55% in a 7-day period from 1,786 to 1,759.
BTC hash rate retraces from all-time high | Source: Arcane Research
Bitcoin’s hash rate has now returned to early September levels, showing a decline to pre-merge levels. But this hash rate remains on the high side even because of this, showing an increased conviction of bitcoin miners in this day and age.
Earnings take a hit
Bitcoin miners are still feeling the heat since the bear market has refused to strike. Miners’ daily earnings have now hit one of their all-time lows, at just over $17 million in daily earnings. This accounted for a 4.04% decline over a 7-day period.
Compensation realized per day followed the same downward trend, falling 19.49% to $254,199. As a result, the percentage of fee revenue decreased by an additional 0.28% to 1.48% of all fee revenue.
BTC price trending at previous peak highs | Source: BTCUSD on TradingView.com
However, last week’s biggest declines were recorded in average transaction values and daily transaction volumes. The first had ended the past week with a 37.61% drop, bringing the average transaction value to $12,304. At the same time, daily transaction volumes declined 38.57%, from $5.023 billion to $3.085 billion. This was the largest decline recorded in the past week. Transactions per day also fell from $254,696 to $250,755, down 1.55%.
The price of Bitcoin has also followed this trend and is struggling in the market. It failed to recover $20,000 and is now trading solidly on its previous cycle peak. Understandably, this has become an important support level for the bulls.
Featured image from Bitcoinist, charts from Arcane Research and TradingView.com
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