Low usage might be responsible for weak crypto markets

Low Usage Might Be Responsible For Weak Crypto Markets

Dogecoin’s Jackson Palmer took to Twitter today to point that the low usage of cryptocurrency networks is responsible for their immense fragility in the face of such “non-news” events like this week.

Palmer identified that the entire market was once again moving together. The presumed wisdom behind such a move was the recent Bitcoin ETF decision being postponed by the SEC. However, such a news event should not have impacted upon the entire market in such a way. Since many in the space had already predicted that the SEC would take as much time as possible to approve or deny a Bitcoin ETF, the recent news should have had a negligible market response for Bitcoin.

SEC’s current decision should only affect the price of Bitcoin. However, the entire market is showing red at the time of writing. Of the largest coins by market capitalization, Bitcoin actually dropped by the lowest percentage over the previous 24 hours – almost 12%. It seems curious, therefore, that the likes of XRP suffered a drop of almost 20% over the same period when an ETF decision would have little bearing on the price of this largely unrelated asset.

Palmer goes on to speculate that the declines in price were indicative of the cryptocurrency networks having incredibly weak markets. This he puts down to an under utilization. He posted three graphs to illustrate his point.

Usage Of dApps

Palmer uses this graph to point out the daily users of decentralized applications. At the time of writing, there are less than 10,000 daily users of dApps. It’s not made clear if this is across all cryptocurrency networks capable of supporting such dApps or just the largest – Ethereum. Either way, the picture is pretty damning for a network that has had over $36 billion invested into it.

Ethereum's Low Transactions

This graph highlights the number of transactions occurring on the Ethereum network over the last 12 months. As that provided for Bitcoin transaction volume, the Ethereum figures are surprisingly low. At the time of writing the graph shows around 635,000 transactions per day.

Ripple’s Decline

In this Tweet, he turns his attention to XRP – the native currency on the Ripple network. Here he highlights that the network is processing fewer payments each day than it was back in 2016. Again, does a network built to facilitate value transactions that aren’t being used for purpose necessitate a multi-billion-dollar valuation?

Even though the conclusion Palmer comes to is not based on intensive studies, if true, substantial adoption and usage are required to stabilize the crypto market.

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