Bitcoin and Ethereum Behave Differently in May, Says Goldman Sachs

Goldman Sachs reported that it finds mixed results in May’s on-chain data: Ethereum remains steady while Bitcoin sees a significant dip in large balance addresses.

Goldman Sachs, a leading global investment banking, securities, and investment management firm, has unveiled a somewhat ambivalent outlook for Bitcoin and Ethereum based on May’s on-chain metrics.

These metrics, an indicator of cryptocurrency adoption, showed that while Ethereum balances remained relatively unchanged across various groups, Bitcoin addresses with balances exceeding 100,000 BTC experienced a significant 31% decline in the past month.

Intense Profit-Booking Witnessed for Bitcoin in May, Notes Sachs

The volume of Bitcoin stored on exchanges experienced a sharp 12% downturn, while conversely, a minor increment was noticed in Ethereum’s supply, according to the analysis.

According to the news of Coindesk, Sporadic spikes in the Spent Output Profit Ratio (SOPR) for Bitcoin, a metric that reflects the level of actualized profits, suggest substantial profit-booking activities in the spot markets.

Moreover, network congestion across the Bitcoin and Ethereum blockchains led to a reduction in monthly address activity for both cryptocurrencies – a 13.8% decline for Bitcoin and 16.7% for Ethereum.

In their report released Monday, Goldman Sachs highlighted a varied landscape regarding Bitcoin and Ethereum adoption in May, based on on-chain metrics.

While Ethereum balances didn’t witness much change across different groups, there was a notable 31% drop in Bitcoin addresses holding over 100,000 BTC.

Profit Made in Spot Markets

Interestingly, the SOPR for Bitcoin hit a few peak levels during May, suggesting a significant amount of profit-booking in spot markets. These levels have not been seen since December 2020, as per the financial giant.

Bitcoin’s presence on exchanges took a substantial 12% dip, while Ethereum’s supply experienced a marginal uptick, the Wall Street heavyweight observed.

The congestions in the Bitcoin and Ethereum networks were a major concern in May, Goldman Sachs said. This resulted in a considerable drop in monthly address activity for both Bitcoin and Ethereum due to inflated transaction fees.

Further, the report noted a continued surge in Bitcoin’s average mean hash rate in May, reaching an all-time high with a 5.4% monthly increase. This rise corresponded with a 16.4% increase in miner revenues. The hash rate refers to the cumulative computational power utilized to mine and process transactions on a proof-of-work blockchain like Bitcoin.

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