• Bitcoin miners are returning, and Ethereum NFTs are fueling market recovery: Kraken

  • Kraken, a cryptocurrency exchange, has released a report that explains some of the key reasons for Bitcoin’s recent surge past the $50,000 mark.

    “Bitcoin reclaiming $50,000 is due to strong technicals and fundamentals, as well as miners returning to the network two months after being regulated out of China,” Pete Humiston, manager at Kraken Intelligence, told ULTCOIN365.

    Hashrate is one of those key fundamentals.

    “After falling to a three-year low in July, hashrate is now back to where it was earlier this year. Higher hashrate strengthens the network and reflects stronger demand for Bitcoin, both of which support Bitcoin’s store of value narrative,” Humiston added.

    Recent fundamentals of Bitcoin

    According to the report, Bitcoin’s performance in August 2021 saw a monthly return of 14 percent.

    Trading volume also increased to a “respectable +17 percent to $136 billion after plunging to an eight-month low of $116 billion in July,” according to the report.

    The mining difficulty of Bitcoin, which reflects how difficult it is to mine a new block on the Bitcoin network, was also increased for the “third consecutive time.” The difficulty adjustment, like the increase in hashrate, is said to reflect “miners returning to the network after being regulated out of China in May.”

    “If the current trend continues, we may see increased interest in Bitcoin as a safe haven asset, especially with the short-term macro picture clouded by coronavirus variants, tightening monetary policy, and inflation uncertainty,” Humiston added.

    Despite some positive figures, Bitcoin’s flagship cryptocurrency underperformed in comparison to other cryptocurrencies.

    “Bitcoin not only underperformed relative to some of the largest altcoins by market capitalization, but also the 20 largest crypto assets,” the report stated, adding that Bitcoin’s underperformance is explained by the Law of Large Numbers, which states that “an asset cannot maintain the same growth rate as it grows larger.”

    Ethereum NFT craziness

    The much-anticipated London fork of Ethereum went live last month.

    During the update, more than 155,000 ETH (just under $550 million at the time) were burned. In comparison to the status quo, this resulted in a 43 percent decrease in ETH issued.

    “When looking at the top 10 projects by ETH burned, NFT projects accounted for 49 percent of all ETH burned in August,” the report stated, adding that this was consistent with NFTs remaining “top of mind for the broader market.”

    While there is no guarantee that NFTs will continue to exist in the future, “excessive demand for NFTs demonstrated that Ethereum remains in high demand and is possibly on the path to becoming a deflationary asset,” according to the report.

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