On-chain analytics company Glassnode has revealed how much of the total Bitcoin volume it collects reflects ‘real’ transactions.
Bitcoin’s Fixed Volume Business Approach Reveals a Shocking Truth
In its latest weekly report, Glassnode discussed how some of the core metrics of the Bitcoin network are shaping up after the cryptocurrency’s price sought the $100,000 milestone.
Among these indicators is the “Transfer Volume,” which measures the total amount of cryptocurrency that participates in blockchain transactions on a daily basis.
Below is a chart of the metric shared by the statistics company that shows how the cumulative value of this metric has evolved over the stock’s history.
The value of the metric appears to have reached a new milestone recently | Source: Glassnode's The Week Onchain - Week 50, 2024
From the graph, it can be seen that the Bitcoin Transfer Volume (in green color) increased significantly during the last cycle, but decreased in this new cycle. Nevertheless, the index has continued to see growth, as it has now crossed the 131 trillion mark.
Note that the volume here is calculated based on the USD value at the time of the transaction on the network, rather than using the total BTC volume converted to dollars at the current exchange rate.
In the same chart, Glassnode also attached data for another metric: Business Adjusted Transfer Volume. This indicator calculates the cumulative transfer volume that occurs between different organizations.
‘Entity’ here refers to a group of addresses that the accounting firm has determined belong to the same investor. Transactions between addresses of the same holder are not necessarily relevant to the broader market, so Business Adjusted metrics tend to provide a more accurate representation of trading activity.
“After including business adjustments, filtered transfer volume stood at $11.63 trillion, just 8.86% of the total,” notes Glassnode. This means that less than 9% of the total volume of Bitcoin involved transfers that are economical in nature.
Does this mean most BTC activity is ‘fake’? However, the answer to that depends on how one defines ‘real’ work. If activity is measured using the pure number of activities rather than their value, then a very different picture of the network is produced.
Here’s a chart from the same report that shows data on cumulative cryptocurrency transaction counts, both unfiltered and business-adjusted versions:
Looks like the difference between these two metrics isn't too significant | Source: Glassnode's The Week Onchain - Week 50, 2024
As shown in the graph above, Bitcoin’s unfiltered Transaction Count, while still large, doesn’t have much of a difference in the Business Adjusted metric.
This would mean that 840 million transfers between different organizations made up 8.8% of the transfer volume. The takeaway here is naturally that the volume inflation comes from the internal management of the central exchange, since these platforms hold very large amounts and therefore, their volume is also usually high.
While such transfers may not have an impact on Bitcoin’s price action, they are still ‘real’ transactions from the network’s point of view, providing a tangible impact in terms of miner’s revenue.
BTC price
At the time of writing, Bitcoin is trading around $101,100, down about 2% from last week.
The price of the coin appears to have surged in the last two days | Source: BTCUSDT on TradingView
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
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