The Bitcoin landscape is pulsating with activity as daily transaction counts surge toward record highs in 2023.
On 30 April 2023, blockchain analytics firm Glassnode stated that “Bitcoin daily transaction counts are nearing record highs, experiencing a significant surge in 2023.” Glassnode remarked, “With the advent of Inscriptions, analysts must now evaluate how much of this is attributable to Inscriptions versus monetary transfers.”
In a series of tweets, Glassnode further elaborated:
- The firm initiated the discussion with our Bitcoin mempool, observing a noticeable change in dynamics this year. The dramatic spike in fee pressure during FTX was prominent, as was the persistent fee pressure throughout 2023. These plateaus correspond with three waves of Inscriptions, with a rush of people aiming to get under 1M.
- Glassnode observed a shift in preferences concerning inscription types. Image Inscriptions dominated until recently, when they were overtaken by text-based ones. Over 2.39M Inscriptions have been incorporated into the Bitcoin ledger, adding 9.3GB of data and paying 212 $BTC in fees.
- Importantly, Glassnode highlighted that Inscriptions account for roughly:
- 30% to 40% of mined transactions
- 10% to 20% of fees paid (The majority are monetary transactions, primarily through exchanges. However, BTC exchange activity is comparatively low, making up about 30% of fees and transactions.)
- Various methods can be used to filter transfer Volume on Bitcoin, such as Raw Unfiltered, Change-Adjusted, and Entity-Adjusted. Across all three, Glassnode noted that volumes are considerably below the peaks of the 2021 bull market, but are nearer to the peak levels of 2017.
- To evaluate the relative scale, Glassnode compared the on-chain volume to Bitcoin size via the RVT Ratio. Higher values indicate that transaction volumes are small relative to market size (potentially overvalued), while downtrends suggest improvements in those fundamentals.
- Glassnode reported that the Bitcoin Long-Term Holder Supply is reaching new all-time highs every day, with minimal spending by investors who bought at the FTX lows. BTC HODLers remain dominant, but the accompanying on-chain activity is subdued in volume and dominated by Inscriptions.
- Lastly, Glassnode reported that Bitcoin transaction counts, address activity, Inscriptions, and Mempool congestion are all high. The degree of HODLing and supply acquired below $30k is also substantial. Conviction remains. However, the upward trend is still in its early stages, and on-chain volumes haven’t yet shown significant growth.