Bitcoin transfers rise, but exchange activity remains flat
Data shows that Bitcoin transactions have grown in number recently, but transfers of exchange deposits and withdrawals have only moved sideways.
The number of Bitcoin transactions has observed a sharp increase recently
According to data from the analysis company at the chain Glass node, 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 right now.
When the value of this metric is high, it means that the chain is experiencing a lot of use from the holders. This type of trend suggests that traders are active in the market right now.
On the other hand, low values of the indicator suggest that the BTC blockchain is seeing low activity at the moment. Such a trend could be a sign that general interest in the asset is low among investors at the moment.
Now, here is a chart showing the trend in the number of Bitcoin transactions over the past 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 graph above, Bitcoin transaction numbers had become stale following the plunge in which the cryptocurrency had descended from its bull rally peak. This trend remained true throughout the bear market until the rally started this year.
With this fresh price increase, the indicator has shot up and has hit levels 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 right now is the highest at approx. two years.
The chart also shows data for two other indicators, Bitcoin exchange deposits and exchange withdrawals. As the names of these metrics already suggest, they tell us about the total number of transfers going into and out of exchanges, respectively.
These metrics should not be confused with the inflow and outflow indicators, as the latter measure the total number of coins flowing into and out of exchanges, rather than the number of transactions.
From the graph, it is visible that despite the increase in the number of Bitcoin transactions, these two metrics have continued to move sideways. This means that the increase in transfers has almost exclusively come from the peer-to-peer (P2P) side and not exchanges.
This is unlike what was seen during the April 2019 rally and the 2021 bull run, where the exchange-related transactions also saw at least some increase along with the price increase.
Since the Ordinals protocol, a method of writing data directly into the Bitcoin blockchain (basically the BTC version of NFTs), has also seen its rise in recent months, part of the increase in transaction numbers is likely driven by such transfers done using this protocol.
BTC price
At the time of writing, Bitcoin is trading around $28,200, up 14% in the past week.
BTC hasn't moved much recently | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, Charts from TradingView.com, Glassnode.com
