On-chain data shows that Bitcoin network utility has recently returned, which could pave the way for another price surge.
Bitcoin Trading Rises to 5-Month High
In new mail In X, on-chain analytics firm Santiment discussed the latest trend in Bitcoin “trading.” Trading here refers to an indicator that tracks the unique number of tokens moving on the BTC blockchain each day.
Related Reading: Bitcoin Flows to US Exchanges: Here’s What Happened Last Time
Often, to measure the interest on the network, transaction volume is used, a metric that measures the total amount of BTC moved on the network daily.
The downside to this indicator is that there is generally a lot of trading activity on the chain as the tokens themselves move back and forth. This activity may not reflect the true interest on the network, so the transaction volume may provide a skewed representation of the chain.
Trading solves this problem to some extent by giving every token traded on the network the same weight, regardless of how many times it may have moved.
When this indicator is high, it means that users are currently trading large amounts of unique coins. This type of trend indicates a high interest in blockchain activities among investors.
Now, here is a chart showing the Bitcoin trading trend over the past few months:
The value of the metric appears to have spiked to high values recently | Source: Santiment on X
As you can see in the chart above, Bitcoin trading has been on a strong rise recently. This growth in the index comes after a period of relatively low activity on the network, so it seems that interest in using the cryptocurrency is returning among investors.
The latest surge in the index, which was the largest in this period of renewed activity, saw 244,000 unique tokens move on the blockchain. This is the largest surge seen since March 5, when BTC was in the middle of its march to an all-time high (ATH).
In general, interest tends to rise during bullish periods, as investors start paying more attention to cryptocurrencies. This activity in turn provides the basis for continued gains.
The fact that trading has fallen to lower levels after the asset peaked may explain why the currency has struggled to gather any further sustained upward momentum. However, things appear to have been different so far in the recent recovery efforts.
“The utilities sector is gradually returning to levels last seen during the first-quarter rally,” the analyst firm notes. Whether this activity will benefit asset prices this time around remains to be seen.
Bitcoin price
Bitcoin recovered to near the $70,000 level earlier in the week, but the asset appears to have suffered a setback as it is now trading at around $66,000.
Looks like the price of the coin has gone through a drawdown over the last few days | Source: BTCUSD on TradingView
Featured image by Dall-E, Santiment.net, chart by TradingView.com
