Although Bitcoin’s price has recently rebounded to mid-May levels, the number of daily transactions recorded on the blockchain is still not growing.
In fact, since the end of July, the number of daily on-chain transactions in BTC has constantly been fluctuating between 180,000 and 270,000, which is well below the 300,000 thresholds that had been almost exceeded continuously since June last year.
Increasing Bitcoin usage on LN
Looking at the trend of this metric in recent years, we actually see a relatively steady decline since May 2019, when 450,000 transactions in a single day were also exceeded.
Therefore, it is possible to imagine that several small transactions have moved off-chain, perhaps through the use of Lightning Network.
Surely, however, the drastic drop that occurred after mid-April is also connected, and not a little, to the drop in Bitcoin’s price.
Bitcoin: transactions on the rise?
Comparing the trend of this metric with that of the average value of the single transaction, we find instead that it has been growing steadily at least since August last year, with a peak at the end of July this year. Indeed, the current level from this point of view is at an all-time high if we exclude the two single massive peaks of July 27 and August 1.
That does indeed seem to suggest that many small amounts of BTC transactions are “moving” off-chain to lower fees, while on-chain mostly large transactions are staying.
Bitcoin and the Glassnode report
However, a recent report from Glassnode also reveals that while the price of Bitcoin has been going up in recent weeks, other on-chain metrics have been going down as well.
Indeed, the levels of some on-chain assets still don’t seem to have reacted to the ongoing bullish movement, remaining at historically relatively low levels since the May crash. Glassnode points out that the number of daily on-chain transactions only a few times in the last five years has been this low and is even similar to what it was during the bearish market of 2018/2019.
That does not detract from the fact that the overall supply dynamic has remained bullish, with, for example, the volume of BTC held by long-term holders reaching a new all-time high at 12.69 million BTC, surpassing the previous record set in October 2020.
Such a scenario would seem suitable for triggering a new bull run, i.e., with on-chain metrics that still have significant room for growth and clear indications of a possible imbalance between a low supply and a possible growing demand.
In other words, should the market demand for BTC grow, at present, it seems decidedly likely to generate further price increases, and low on-chain bitcoin usage metrics suggest that demand still has ample room for growth, albeit for now only in theory.
To that should be added that trading volumes on cryptocurrency markets are currently not very high, especially when compared to those recorded during the bull run at the beginning of the year, corroborating the hypothesis that there is still ample room for growth, albeit again for now only in theory.
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