Bitcoin Price Sees Renewed Stability as Average Block Size Reaches All-Time High

Bitcoin’s price drifted slightly higher on Friday, as the potential for further downside continued to erode following a week-long drop in volatility. In terms of fundamentals, bitcoin’s average block size has reached a new record high, reigniting a long-standing debate over full blocks and the so-called capacity cliff.

BTC/USD Update

The bitcoin price is currently trading at $3,684 on Bitfinex, a figure is much higher than comparable exchanges and well above the average price quoted by CoinMarketCap. In terms of averages, bitcoin is presently trading at $3,637.69, having gained 0.7%.

Trade volumes have declined steadily in the latter half of the week. On Friday, 24-hour volumes dropped below $6 billion for the first time since Sunday. Market activity tends to decline heading into the weekend, which is understandable given the continuous 24-hour cycle of cryptocurrency trading.

BitMEX continues to be the single-largest virtual exchange market for BTC trades, though its share of total volume has fallen below 8%. Spot trading accounts for the remaining 92%. As Hacked reported earlier this week, derivatives trading has witnessed a substantial boost over the past six months, with “private bilateral” contracts valued anywhere between $125 million and $500 million per month. Read more: Bitcoin and Derivatives: Why $4,200 is So Critical.

Bitcoin’s modest upside has resonated with the broader market. Most of the top 20 cryptocurrencies reported gains Friday, dragging the total market capitalization back above $121 billion.

Average Block Size Climbs

Bitcoin’s average block size has surged through the first half of February, reaching the highest level on record, according to data from The average block size peaked at 1.305 MB on Feb. 11, up from 0.899 MB the week before. The following chart illustrates fluctuations in the average block size going back 60 days.

At the time of writing, the average block size was 1.08 MB. This figure is updated continuously every 10 minutes.

In any case, the recent surge in block size has exceeded the previous limit of 1 MB established by the Bitcoin network. It has also reignited the debate over full blocks and their impact on the network. For some, “full blocks” essentially mean a backlog of transactions waiting to be incorporated into future blocks. This not only clogs up the network if blocks are consistently full, it raises the risk of long transaction delays and even outright rejection. This is a painful tradeoff for a network that is promoting bitcoin for everyday use.

Some members of the bitcoin community still advocate for smaller block sizes. They argue that large block sizes could increase centralization because it would mean that full nodes could only be run in large data centers.The debate over how to alleviate these concerns is still ongoing.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi