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Saturday, January 15, 2022

How Is Bitcoin On-Chain Activity Reflecting The Price?

Typically, higher on-chain activity comes with a rising price and vice versa.

The below is from a recent edition of the Deep Dive, Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin analysis straight to your inbox, subscribe now.

In today’s Daily Dive, we’re covering the latest state of on-chain activity across transactions, volume, active addresses and entities. Typically higher activity comes with a rising price and vice versa.

When it comes to analyzing overall transfer volume of the network denominated in BTC, change-adjusted volume is one that we’ll focus on. That’s different from both total transfer volume and entity-adjusted volume estimates, which don’t account for transaction change and filter out volume sent within the same entity. Currently, the network is settling around 593,000 per day.

Typically around all-time highs, there’s a rise in BTC-denominated volume. Here we can see the most recent rise over the last three years using a 90-day rolling sum of volume. The latest increase doesn’t show up as a spike in entity-adjusted transfer volume so most of the rise looks to be driven by internal transfers.

Generally, we would expect BTC-denominated transfer volume on-chain to fall over time with rising Lightning Network adoption and rising USD value. More total value can transfer on the network in lower BTC amounts. Currently the median change-adjusted transfer volume is $457.50.

In previous bull markets and at all-time highs, miners were a much higher percentage of revenue from transaction fees. Now at the latest all-time highs, the percentage of transaction fee revenue remained below 2%.

Some activity indicators to track, which generally move together on the network, are active addresses, active entities and number of transactions. Acceleration in these metrics typically correlate with a rise in price. All were in an accelerating trend since July, peaking in November.

Typically, higher on-chain activity comes with a rising price and vice versa.

Source : Magazine: Bitcoin News, Articles, Charts, and Guides Read More

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