On-chain activity on the Bitcoin network reaches an all-time high
Let’s be honest: not a lot is happening on the Bitcoin network in terms of tech developments.
Let’s be honest: not a lot is happening on the Bitcoin network in terms of technological developments. In the development overview, the largest and oldest cryptocurrency is currently ranked 11th — behind Solana (SOL) and the Internet Computer (ICP). This has changed in recent weeks, however. With the integration of ordinal inscriptions there is movement on the network.
The now 160,000 Bitcoin NFTs are a popular topic of discussion. Critics deride the "waste" of valuable block space. Proponents instead see increased demand for this space and for Bitcoin’s technological development.
A neutral look at the data reveals more, however. The average block size has shifted significantly, from a typical cap of 1.5 megabytes (MB) to 2.0 and 2.5 MB. BTC inscriptions are inherently larger files and therefore occupy more space in each Bitcoin block.
A second indicator of rising on-chain activity is the Unspent Transaction Output (UTXO). The total number of UTXOs has reached a new record of 137 million. UTXOs are the current total of all unspent, potentially spendable outputs in the network, i.e., satoshis that can be transferred with the corresponding private keys. The use of Taproot addresses (which enable ordinal inscriptions) also reached a new record.
Low BTC transaction volume
Beyond activity on the Bitcoin network, the price has risen significantly as well. The transaction volume, however, has been "extremely low," as Glassnode explains in its weekly analysis report.
"Such low values have only been seen a few times before in history," according to Glassnode.
"What’s interesting is that all of these instances have occurred during bear markets and significant sell-off corrections." This suggests the market is overbought, at least in the short term, according to Glassnode.
MVRV indicator rises again
A look at the MVRV indicator provides more clarity. This metric describes the ratio between market capitalization and realized value stored in Bitcoin. When the ratio of market cap to realized value falls below 1, it points to overselling — a regime change was likely to follow. It did not take long to materialize. After the recent strong bull rally, Bitcoin had risen above $25,000. At the same time, the MVRV value also climbed and now sits at 1.23. Whether the price of Bitcoin will rise further remains to be seen.
