Data from Glassnode shows that Bitcoin transfer volume is still 79% lower than what was observed during the bull run in 2021.
Bitcoin transfer volume remains low despite the uptick
According to data from the on-chain analytics company glassThe total transfer volume on the BTC network is $2.73 billion per day alone. “Total Transfer Volume” here is an indicator that measures the total amount of Bitcoin (in USD) that is traded on the blockchain per day.
When the value of this metric is high, it means that investors are currently moving a large number of coins around the network. This trend is generally a sign that traders are active in the market at the moment.
On the other hand, low values of the indicator indicate that the blockchain is noting low activity at the moment. This type of trend could indicate that the general interest in the currency among investors may be low at present.
Now, here’s a chart showing the trend in total bitcoin transfer volume over the past few years:
The value of the metric seems to have been in an overall downtrend since quite a while now | Source: Glassnode on Twitter
Note that the indicator for total Bitcoin transfer volume used here is an “Entity Adjustment” indicator, which means that the transactions that are counted here are transactions between entities, not individual wallets.
“Entity” refers to a group of addresses that Glassnode has determined belong to the same investor. Making the adjustment for entities has the benefit of removing all transfers that take place between one owner’s wallets from the equation, providing a better estimate of on-chain activity.
From the above graph, it is clear that the total modified transfer volume of a Bitcoin entity has risen to some very high values when the uptrend occurred in the first half of 2021.
This trend makes sense, as sharp price movements like spikes are exciting for the general investor, so a lot of users are attracted to the blockchain during these periods and add to the conversion volume.
At the peak during this bullish trend, the index managed to reach a value of around $13.1 billion. Since then, however, the scale has been in general decline.
Also note the spike in the second half of 2021 is a rise in conversion volume, but the metric has not yet reached values as high as it was during the spike in the first of that year.
Bear markets have historically seen this metric drop to lower values (as price tends to display dull sideways price action for prolonged periods during these periods), so it’s not surprising that the index also fell during the recent bear market.
What might have been unexpected, however, is that despite the start of a rally this year, total bitcoin transfer volume hasn’t seen any significant spikes. The index is currently valued at about $2.73 billion, which is 79% less than the peak value of the 2021 bull run.
This lack of volume may indicate that the cryptocurrency does not have the same interest behind it in 2021, which could be concerning about the sustainability of the rally.
BTC price
At the time of writing, Bitcoin was trading at around $26,800, down 2% in the past week.
BTC consolidates sideways | Source: BTCUSD on TradingView
Featured image by Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com