Developments like the introduction of bitcoin-based smart contracts and other key on-chain metrics suggest the global cryptocurrency market is in the early stages of another bull cycle, according to Bitfinex analysts.
Bitcoin network activity and transaction fees
Despite the current decline in the bitcoin price (BTC), network activity remains robust, fueled by BRC-20-related transactions. Bitfinex analysts have revealed via the latest Bitfinex Alpha Report that BTC transaction fees have skyrocketed, partly due to increased activity in the BRC-20 ecosystem.
A newly launched bitcoin-based decentralized exchange, Trustless Market, allows users to trade Smart BRC-20 tokens, provide liquidity, earn transaction fees, and issue new tokens.
However, this surge in transaction activity and higher fees may discourage some users, as active and new addresses interacting with the network approach historical lows.
Bitcoin miners, on the other hand, may benefit from the changing dynamics.
The bitcoin fee ratio multiple (FRM), which measures the ratio of miner income from new bitcoin issuance to transaction fees, has experienced a significant decline. This shift indicates a move towards transaction fees as a more substantial revenue source for miners, boosting the network’s security and overall health.
Are the bulls backs?
Long-term metrics provide a compelling case for an early bull market. Glassnode’s “Recovering from a Bitcoin Bear” dashboard shows all eight indicators flashing green, historically a bullish signal for the world’s flagship cryptocurrency, the report notes.
Although some short-term metrics hint at a potential retracement, the researchers have hinted that bitcoin’s current trading position remains comfortably above key pricing models.
In the same vein, market and on-chain movements reveal that investors have been diversifying into stablecoins and ether derivatives recently.
Bitcoin has seen its price fluctuate in recent times. At the time of writing, BTC has a market cap dominance of 44.5% and is exchanging hands for $26,800, with a low/high range from $26,783.63 to $27,211.21 over the past seven days.
According to market analyst Michael van de Pope, if BTC fails to regain its position within the resistance zone of $26,500 to $26,800, there is a possibility of a pullback in price, potentially reaching as low as $25,000.
