The past week was anything but positive for the collective crypto-industry. Bitcoin registered its 6-month low after testing its support at $6500, with other major assets following suit. Ethereum, the second-largest crypto-asset by market cap, registered an eight percent dump as well, marking a bearish period for the market. Incidentally, the market fell right after the People’s Bank of China revealed that the central bank would be shutting down all local crypto-exchanges.
According to Coinmetrics, during the slump, Bitcoin’s market cap took a significant hit as well. However, it also found that that BTC’s realized cap suffered a 0.3 percent decline only. When Bitcoin’s market cap was compared to its realized cap, the MVRV ratio (Market value to Realized value) was studied, which dropped down to 1.22 on 24 November. The MVRV ration registered on the aforementioned date was the lowest recorded since May 2019.
MVRV ratio or realized value explains the collective sum of entries from users when they started to estimate Bitcoin’s value from a long-term perspective. Realized value also assists the market in eliminating lost or unused coins from total value calculations.
A low MVRV ratio suggests that market participants are making minor profits and if the MVRV value is negative, it means that the asset is undervalued. Bitcoin‘s low MVRV score suggested that despite the crash, users still held a profitable position in the market.
Speaking of Ethereum, despite the drop, ETH fees spiked by 21.6 percent over the past week. According to CoinMetrics, the rise in fees was due to the traffic witnessed on ERC-721 transactions.
On 22 November, the ERC-21 transaction count reached 30,000 and recorded the highest single-day total since early 2018. The spike in transaction count was found to have been caused by God’s Unchained, an ETH-based trading game that opened its trading marketplace on 22 November.
The ERC-721 transactions were found to be filling up ETH blocks at a rapid pace and the congestion caused in the network led to a rise in ETH fees. Additionally, it was also reported that the mean fee for certain blocks crossed over $30, but dropped back to normal levels over the next 24 hours.