Crypto sentiment may be at rock-bottom but Bitcoin and Ethereum could now present a sound buying opportunity according to the fundamental analysis of Chris Burniske.
The New York Venture Capitalist and author of best-selling book ‘cryptoassets’ believes Bitcoin and Ethereum prices have spiralled far lower than any decrease in key fundamental indicators.
“Fundamentals of quality crypto networks are down less than prices, and significantly so,” says Burniske.
While there is much conjecture over crypto fundamentals, Burniske believes cryptoassets can be assessed fundamentally by analysing demand and supply indicators such as hash rates, number of daily transactions, estimated daily transaction value, daily unique addresses used and (for Ethereum) total daily gas used.
In a Medium post, Burniske has outlined three compelling reasons why he believes Bitcoin fundamentals and Ethereum fundamentals are stronger than prices suggest.
While the network value of both Bitcoin and Ethereum continues to slide, the number of daily transactions has remained stable.
“From peak, Bitcoin’s and Ethereum’s network values are down 81% and 93%, respectively, whereas daily number of transaction are only down 41% and 52%, says Burniske.
Transaction Value & Ethereum Gas Used
Burniske notes that despite Ethereum’s network value declining by 93% since its peak, gas usage shows demand for its native functionalities has only dropped 7%.
“Developers and consumers using Ethereum’s smart contracts continue mostly unabated,” he says.
Bitcoin has seen its daily transaction value decrease 74% – more in line with its network value drop of 81%.
Hash rates of both Bitcoin and Ethereum are higher now than their peaks.
While this supply-side fundamental is currently outperforming price, Burniske warns it’s a lagging indicator.
“Both Bitcoin and Ethereum’s hash rates are on negative slopes which requires us to keep a close eye on them.
“It would be good to look at the number of nodes supporting the network, and miner revenues for both networks (transaction fees + block subsidy).
To find out more about how Chris Burniske analyses Bitcoin fundamentals click here to read ‘Cryptoassets’.
Why demand for ‘Bitcoin cards’ is exploding! Click here to read Micky’s article.