Off-chain instead of on-chain? The Bitcoin Blockchain remains in sleep mode while the Lightning Network turns up. The market update.
The crypto market is under attack. Sales push the total market capitalization in a 24-hour comparison by five percentage points again just below the 2 trillion mark. Among the ten largest cryptocurrencies, Dogecoin (DOGE) is still doing best with a minus of 2.4 percent. At the lower end, Polkadot (DOT) and Ethereum (ETH) recorded the largest losses, each with a price discount of over six percent. The workhorse Bitcoin (BTC) is in the midfield with a minus of 4.5 percent. The BTC market capitalization is now 200 billion below the 1 trillion hurdle that the cryptocurrency last touched in early September.
Bitcoin network growth stagnates …
The on-chain activities in the Bitcoin network have increased according to the analysis portal Glass node Shut down successively over the past few weeks. The number of transactions has been declining since May, which the data researchers suggest indicates “that fewer market participants are active and the relative interest in the asset is falling”. The daily transaction figures are currently between 175,000 and 200,000 transfers. This corresponds to a level similar to that last seen in the 2018 bear market.
Unsurprisingly, the decline in transactions correlates with a decrease in active on-chain entities. Given the current low level of demand, Glassnode concludes “that the market may be dominated by HODLers and traders while the participation of newer entrants and private speculators declines”.
This assumption confirms the “Entities Net Growth” metric, which calculates the ratio between network participants who buy new Bitcoin and those who sell their Bitcoin. As the following graphic shows, the number of around 13,000 new entities per day is also in bearish territory. From this it can be deduced that “the majority of today’s market participants are most likely long-term HODLers”. Now it is a question of “whether they can hold the line and offer sufficient purchase support”.
… not the Lightning growth
The Lightning Network, on the other hand, is practically blossoming. With a total of 2,926 Bitcoin smuggled through the network, the network recently set a new record high. The number of nodes is also at a record level of over 15,000 and only 90 nodes below the peak value reached a week ago. This also applies to the number of payment channels. The second-layer solution is now nested in over 72,000 channels.
The second-layer solution, in which Bitcoin transactions are processed off-chain until they are processed, is an increasingly important cornerstone for BTC payments. The integration of the payment solution on Twitter should represent a further growth booster. A few days ago, the short message platform announced the integration of the Lightning Network for a BTC tip function via the Strike app.