Bitcoin Transfers Rise, But Exchange Activity Remains Flat
Data shows that Bitcoin transactions have grown in number recently, but exchange deposit transfers and withdrawals have only moved sideways.
Bitcoin transaction count has seen a sharp increase recently
According to data from on-chain analytics firm glassnode, BTC blockchain activity has increased significantly recently. The indicator of interest here is the “transaction count”, which measures the total number of Bitcoin transactions taking place on the network at the moment.
When the value of this metric is high, it means that the network is receiving a high amount of usage from cardholders. This type of trend suggests that traders are active in the market right now.
On the other hand, low indicator values suggest that the BTC blockchain is currently experiencing low activity. Such a trend could be a sign that general interest in the asset is low among investors at the moment.
Now, here’s a graph that shows the trend in Bitcoin transaction counts over the last few years:
The value of the metric seems to have seen a sharp rise in recent weeks | Source: Glassnode on Twitter
As shown in the chart above, Bitcoin’s transaction count has become stale after the slump in which the cryptocurrency descended from the top of the bull run. That trend held true throughout the bear market until the rally started this year.
With this new price increase, the indicator has skyrocketed and reached levels that were only last seen during the bull run in the first half of 2021. This means that the number of transfers taking place on the chain is now the highest in about two years .
The chart also shows data for two other indicators, Bitcoin Exchange Deposits and Exchange Withdrawals. As the names of these metrics already indicate, they inform us about the total amount of transfers entering and leaving the exchanges, respectively.
These metrics should not be confused with entry and exit indicators, as the latter measure the total number of coins entering and exiting exchanges rather than transaction counts.
From the graph, it is visible that despite the increase in Bitcoin transaction count, these two metrics continued to move sideways. This means that the increase in transfers came almost entirely from the peer-to-peer (P2P) side and not from exchanges.
This is different from what was seen during the April 2019 rally and the 2021 bull run, where currency-related transactions also saw at least some increase along with the price increase.
As the Ordinals protocol, a method of inscribing data directly onto the Bitcoin blockchain (basically the BTC version of NFTs), has also emerged in recent months, part of the increase in transaction counts is likely driven by such transfers made using this protocol.
BTC price
At the time of writing, Bitcoin is trading around $28,200, up 14% over the last week.
BTC hasn't moved much recently | Source: BTCUSD on TradingView
Featured Image of Kanchanara from Unsplash.com, Charts from TradingView.com, Glassnode.com