Current price analysis enables one to understand what is occurring in the short term. Still, on the other hand, one can only comprehend the evolution over the long term by studying the on-chain fundamentals.
Despite Bitcoin (BTC) and Ethereum (ETH) losing more than 50% of their market value, the number of addresses with at least $1,000 steadily increased.
Prices follow a much more erratic and dilated trend than dynamics that emerge over the long term, such as the growth in the number of addresses. These latter ones are, as is well known, much more nerve-racking and follow trends with much shorter durations.
One can start with Bitcoin and observe how the orange price line has been steadily declining over the four quarters of 2022. The decline was 65%, between $47,000 in the first quarter and $16,600 in the fourth.
Furthermore, there was no gradual decline; there were three significant collapses, two of which occurred in Q2 (Terra and Celsius) and one in Q4 (FTX).
However, the number of Bitcoin addresses on which at least 0.15 BTC was reported to be held increased consistently to the point where by the end of the year, it had increased by +23% compared to the start of 2022.
ETH experienced a 64% decrease in price from $3,300 to under $1,200, excluding brief spikes. However, at the same time, there were 21% more on-chain addresses with at least one ETH.
This increase may have been slightly less than that of Bitcoin because a smaller percentage of people likely consider BTC to be a store of value than do the same about ETH.
However, it should be noted that since ETH switched to PoS, the gap between it and BTC in this context has significantly shrunk recently. It is because ETH now has a deflationary supply, at least for the time being.
