As a seasoned analyst with over two decades of experience in financial markets, I find the insights provided by Glassnode’s latest report to be both intriguing and enlightening. The entity-adjusted approach to Bitcoin volume offers a fascinating perspective on the underlying dynamics of this burgeoning asset class.
According to the data provided by Glassnode, they’ve shown the proportion of the overall Bitcoin transaction volume that can be attributed to genuine transactions.
Entity-Adjusted Approach For Bitcoin Volume Reveals Shocking Fact
As a researcher delving into the intricacies of the Bitcoin network, I’ve been closely examining the state of several key metrics following the cryptocurrency’s recent surge past the $100,000 mark in its weekly report by Glassnode.
One of the key metrics here is the “Daily Transaction Volume,” representing the overall sum of a particular cryptocurrency being used in transactions on the blockchain each day.
As an analyst, I’ve been examining the timeline provided by the analytics firm, which illustrates the progressive accumulation of this particular metric throughout the lifespan of the asset in question. This chart provides a clear overview of how this metric’s total value has evolved over time.
Looking at the graph, it’s clear that the accumulated Bitcoin Transfer Volume (depicted in green) experienced a significant surge during the previous cycle. However, its pace seems to have decelerated in the current cycle. Despite this slowdown, the indicator is still showing an increase as it has surpassed the $131 trillion threshold.
As a researcher, I’d like to point out that when calculating the volume in this study, I opt for using the USD value at the exact moment a specific transaction took place within the network, instead of converting the total Bitcoin volume to dollars based on the current exchange rate.
Additionally, the same graph includes data for another measure called Entity-Adjusted Transfer Volume. This metric quantifies the total volume of transactions taking place among distinct entities.
In this context, an ‘entity’ signifies a group of addresses that have been identified by the analytics company as belonging to a single investor. Transactions between these addresses are not significant for broader market analysis since they pertain to the same owner. Therefore, metrics that are adjusted according to entities offer a more precise picture of actual trading activity.
According to Glassnode, when entity adjustments are made, the remaining transfer amount is approximately $11.63 trillion. This represents only about 8.86%, or roughly 9%, of the entire Bitcoin volume. In other words, nearly 90% of all Bitcoin transactions have been non-economic in nature.
To clarify, whether most Bitcoin (BTC) activity can be considered ‘fake’ isn’t straightforward because it largely depends on what we define as ‘real’ or legitimate activity. If we measure activity based not just on transaction values but also on the raw number of transactions, we might get a significantly different impression of the network.
In this report, you’ll find another graph displaying the accumulated number of transactions for the specified cryptocurrency. Both the original and adjusted-for-entities counts are presented.
Looking at the graph, you’ll notice that while the raw Transaction Count for Bitcoin remains larger, it isn’t significantly different from the Entity-Adjusted measurement.
This means that only about 8.8% of the total transfer volume can be attributed to the approximately 840 million transfers between various entities. In simpler terms, the majority of the increase in transaction volume appears to have originated from internal management by centralized exchanges, as these platforms often possess substantial assets, which consequently results in a high volume of transactions.
Even though these transfers might not directly influence Bitcoin’s market price, they are undeniably genuine transactions within the network. They generate a tangible effect by boosting the income received by miners through transaction fees.
BTC Price
At the time of writing, Bitcoin is trading around $101,100, down almost 2% over the last week.
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2024-12-13 10:42