The cryptocurrency market is slowly regaining its lost glory from is 2017 highs when Bitcoin registered the highest price ever. Following this feat, the market went into a year-long downturn that saw most cryptocurrency assets lose more than 90% of their value from all-time highs.
The market is changing, and it is doing so in the most subtle of ways. Sure, the price has risen more than 200% for the flagship cryptocurrency and most other altcoins have seen massive gains in price appreciation over the past few months.
Bitcoin as a network, however, is maturing and one of the best indicators is the transaction volume.
Falling in congruence to the falling price, the market dumbed as fewer people had any interest in using the network.
According to data provided by Coinmetrics, we can see that as the bear market stretched on towards the end of 2018, so did the amount of economically useful transactions recorded per day.
In December, when the prices saw some of the lowest levels in a long time, the daily transaction volume as reported by Coinmetrics stood at $561.9 million on December 30th. It was the lowest point of the year.
However, following this drop, the volume of economically useful transactions has risen steadily over the last 7 months to reach a 19-month high on July 29th. Coinmetrics reports a daily transaction volume of $6.3 billion on this day, similar figures were last recorded back in January 2018.
An August 1st report by industry data researcher Longhash focuses on this statistic in particular. According to the report, the Bitcoin price is highly volatile at eh moment making it hard for any analyst to accurately predict the next price action of any digital asset.
Bitcoin, for instance, has been ranging between the mid $9K and $10K levels for weeks now, temporarily breaching the $10K mark only to come trampling down each time. It’s hard to use price indicators to judge the status of the network. But according to Longhash:
“nobody seems to have a clear indication of what prices might do next. And the best way to illustrate that uncertainty is to examine transaction volumes on the Bitcoin network.”
It is critical to realize that the Bitcoin network has different kinds of transaction most of which are economically insignificant such as individuals and entities transferring funds between personal wallets.
However, Coinmetrics tries to differentiate between economically useful and otherwise insignificant data.
“The distinction between adjusted tx volume and raw tx volume removes non-productive internal transactions like exchanges sending money back and forth between their own hot or cold storage wallets, while still considering all external transactions,” the Longhash report reads.
“Adjusted transaction volume is thought to be a better metric for analyzing real levels of activity on the Bitcoin network, though it’s worth noting that even the adjusted tx volume metric is not a perfect representation of Bitcoin’s usage.”
The report further highlights a great feat by the transaction volume. A day before the figure shot to historical highs of $6.3 billion, it had fallen to 2-month lows of $1.11 billion. This means that within a single day, the daily volume rose by a massive $5.2 billion.
“There has never been a day in Bitcoin history where adjusted tx volume has jumped over $5 billion in a single day. That is, until [July 29th].”