The changes that can be felt in all our lives by the coronavirus are slowly becoming a habit for many people. The financial markets also seem to have calmed down (for the time being). With Bitcoin, on the other hand, there is no reason to get used to anything new, because the network continues to work just as it did before the crisis.
Apart from price crashes, which are of course unavoidable in the current situation, a block is still added to the blockchain every 10 minutes and transactions are carried out uncensored. This resistance to the current situation is still correct, but now it seems that some Bitcoin parameters, such as the number of transactions, are also affected by the crisis
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Bitcoin transactions are at a low point
Many Crypto and Bitcoin fans pay attention mostly only to the BTC course, which is understandable. In the long run, however, it is much more important to observe the fundamental parameters, because these are the ones that make a positive price development possible in the first place.
Conversely, the example of the 2017 bull run shows that price increases can only be sustained if they are supported by fundamental parameters. One of these parameters is the number of transactions sent through the Bitcoin network.
Unfortunately, this fundamental value in Bitcoin now also seems to have been infected by the coronavirus, as the value has fallen by 100,000 transactions per day. Whereas, before the coronavirus crisis, an average of almost 350,000 transactions were sent out daily. This figure has now fallen to 250,000 transactions, which is a reduction of almost 29%.
Crypto expert Mati Greenspan wrote on Twitter that these are the lowest values since December 2018, when Bitcoin and Co. were still in the deep crypto winter.
Is the slump in daily transactions good or bad news for Bitcoin?
At first glance, this news seems to be bad for Bitcoin. In principle, this is also true, but the slump in daily transactions is a value that does not change the way the network works and, therefore, does not pose a direct threat to BTC.
Even payment giants from the traditional financial sector like Visa have announced that they are already noticing declining transaction numbers. The main reason, both for Visa and for Bitcoin, is probably that people are consuming less at the moment, which simply means fewer transactions.
As unpleasant as the development of daily transactions is at first glance, it is clear that this figure will recover over time. On the other hand, it also clearly shows that Bitcoin is probably (partly) used for paying for products and services. That is because trading on the stock exchanges is still going on. Only consumer consumption has collapsed as a result of the corona crisis.
This fact, in turn, is very gratifying because it underscores that Bitcoin has value solely through its use as a payment network. Although this argumentation may not completely convince critics, it does show in which direction BTC can go in the future. And this direction is still clearly bullish.
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First published in CRYPTO MONDAY, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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