Connect with us

Bitcoin

Bitcoin Transaction Volume is Down – Should You Be Worried?

Published

on

Decline

Needless to say by now, the price of bitcoin has been struggling this year. Since the record highs from December last year, prices are now down by more than 60%. Meanwhile, the number of transactions per day on the bitcoin network has also shown lacking momentum, causing FUD among investors.

Looking at the number of daily bitcoin transactions reveals that the number hasn’t been this low since February 25 when it slipped to 144,000 transactions per day. With some investors now questioning the future of bitcoin, many are looking to the transaction volume for clues on where the price might be heading next.

Following the low on February 25, the number of transactions briefly shot up again before it fell back down. At the time of writing, the daily number of transactions is again close to the low from February, with 164,400 confirmed daily transactions.

Relationship between value and transactions

I recently came across an article on Forbes that outlined a model developed by a group at Trefis.com for estimating the price of bitcoin with an amazing accuracy of 96% on historical data. Specifically, the they looked at the number of active bitcoin users and the daily transaction volume in USD terms, using a model based on Metcalf’s Law, which is something we have previously covered here on Hacked.com.

Judging from the group’s findings, it appears very likely that the number of bitcoin users, transaction volume, and price are all directly linked. It clearly shows that there is a direct relationship between bitcoin adoption and price.

Number of transactions is not the whole story

Still, not everyone agrees that the lower number of bitcoin transactions is necessarily a bad thing. It can be argued that the lower number of bitcoin transactions per day is in fact a consequence of new solutions such as SegWit and batching of transactions being implemented by exchanges. These are all solutions that are implemented to improve the usability of bitcoin by lowering transaction fees and network congestion.

Some are also questioning whether the price of bitcoin is a function of transaction volume, or if it is the other way around. One can argue that in bull markets, more and more people are jumping on the bandwagon, generating lots of transactions between exchanges. Rising transaction volume would in that case come as a consequence of the rise in price.

Regardless of whether the chicken or the egg came first, one important thing to note here is the difference between the confirmed transactions per day and estimated transaction value. So whereas batching of transactions definitely lowers the number of confirmed transactions, it should in theory not affect the total value of transactions.

As we can see from the graph below, the drop in the number of confirmed transactions per day has been rather sharp since it reached an all-time high back in mid-December last year.

transactions per day

When we look at the estimated transaction value, however, we can see that the drop has not been quite as dramatic.

estimated transaction volume

Bitcoin price action aside, the above graphs confirms that looking at the number of daily transactions alone does not give the full picture of the extent to which bitcoin is being used.

So whether price is a function of transactions or not, it leads us to the conclusion that transaction batching and otherwise better management of transactions is having an impact on the transaction count. The sharp drop we have seen here recently therefore should not be a major cause of concern for bitcoin investors going forward. Instead, it indicates that transaction batching has been a success, improving scalability with lower fees and faster transaction times for everyone.

Featured image from Pixabay.

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

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
7 votes, average: 4.57 out of 57 votes, average: 4.57 out of 57 votes, average: 4.57 out of 57 votes, average: 4.57 out of 57 votes, average: 4.57 out of 5 (7 votes, average: 4.57 out of 5)
You need to be a registered member to rate this.
Loading...

4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




Feedback or Requests?

Blockchain

Lightning Network Reaches 10,000 Channels And Total Capacity Of 100 Bitcoins

Published

on

The lightning network reached a major milestone today, with the CTO of Satoshi labs Pavol Rusnak stating that it had reached 10,000 channels with a total channel value of 100 bitcoins.

Given this huge accomplishment, it is worth providing a quick recap on what exactly the lightning network is.

The lightning network arose out of a need to solve Bitcoin’s high fees and slow transaction speeds as more and more people began conducting transactions on the network.

Specifically, the core idea behind how the lightning network works is that is possible to create small “bidirectional payment channels” that act as a running tab between two separate accounts.

The smart contracts determine how much is owed to who, but none of this is stored directly on the Bitcoin blockchain until a payment is rendered. Basically, it is a running tab system that allows for microtransactions. Allocations are made between parties off-blockchain, with all the confidence of performing commerce on-blockchain.

This approach, while not technically as secure as transacting on the blockchain directly, drastically reduces the load on the actual network, effectively outsourcing much of the processing power needed to send transactions.

After examining today’s lightning network data myself, it became apparent that today’s milestone has already been exceeded and continues to grow.

At the time of writing, there was a total of 10,105 channels open, with a channel value of 102.5 Bitcoins. This is a major leap forward for the scaling potential of the lightning network and could trigger further bullish sentiment on blockchain services making use of it in the future.

That is not the only positive lightning network adjacent news. Specifically, Bitrefill, which is a service integrated with the lightning network that allows customers to top up their phone plans with cryptocurrency, announced that it will start selling gift card vouchers to Amazon and other brands.

While the company may be little known, what this means in practice is that you can now use the lightning network to basically buy anything online.

As more and more lightning channels become used, and as more mainstream services make use of the network, (even if only to facilitate their own branded gift cards), the greater adoption of the network overall will occur.

This means in practice that the long-term vision of Bitcoin as a reliable backbone for payments and data transmission is on track. While this is great news to supporters of Bitcoin, supporters of Bitcoin Cash may want to begin questioning the overall utility of their coin as lightning is adopted more and more.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 10 rated posts




Feedback or Requests?

Continue Reading

Altcoins

Cryptocurrencies Bounce from Intraday Lows as Bitcoin Price Stabilizes, Stellar Regains Momentum

Published

on

The crypto markets were back in positive territory Saturday, with prices rebounding from an intraday slump that saw the likes of Stellar XLM post double-digit percentage losses.

Crypto Market Update

Bitcoin and the largest altcoins were seeing green Saturday afternoon, as bullish sentiment returned to the market following an earlier slump. At the time of writing, the combined value of all cryptocurrency was $282.7 billion, according to CoinMarketCap. The market bottomed closer to $272 billion at 21:00 UTC on Friday. Total trade volumes were $12.3 billion, a decline of 20% from the previous day.

The bitcoin price reached a low of $7,262 Friday before swinging sharply in the opposite direction over the next 16 hours. Bitcoin now sits at $7,411, with average daily volumes hovering near $3.9 billion.

Stellar XLM – the week’s top performer – was down 10% earlier in the day as bullish sentiment wavered. However, Lumens have bounced back sharply, and now trade more than 6% higher compared with 24 hours ago .The Stellar price currently sits at $0.291.

Stellar returned a whopping 53% for the week through Friday on reports that IBM was looking to launch a new stablecoin on the XLM network.

Ethereum was also trading in positive territory Saturday following a week of modest gains. At the time of writing, ETH/USD held near $467 for a 24-hour return of 3.8%.

Fake Volumes?

Trading volume – the amount of a security that changes hands over a given period – is a hotly debated topic in the cryptocurrency market. Last month, Hacked reported on a recent study showing that a large chunk of crypto trade volume is fabricated by exchanges.

Cryptocurrency trader and researcher Sylvain Ribes concluded that more than $3 billion in claimed trading volume was fabricated. The study, which was carried out in March, outed OKEx as the worst offender with over 90% of its order books being nonexistent.

While we have not been able to verify Ribes’ claims, data provider CoinMarketCap has announced new measures to crack down on fake volumes.

Now, data provider CoinMarketCap has announced new measures to address what it says could be fake volume figures.

In a blog post published Thursday, the site said it has already lowered a minimum volume requirement for digital currency exchanges listed on the site. The policy is intended “to filter for more popular exchanges that could be listed on CoinmarketCap.”

The blog post identified three “volume concerns” it intends to tackle, including fee-free mining models, low fee models and artificial volumes.

The post added:

“While we have a relationship with most of the exchanges listed on our site, there is no guarantee that any of them will respond or comply to any specific guidelines, but we have to continue showing users the best approximation of price and volume based on all the data we have available.

The evolution of new models such as transaction mining also means that there needs to be new ways to account for volume. Compounding it is the fact that they are, in fact, enabling greater liquidity in the way that users are trading more readily on the platforms.”

CoinMarketCap added that its volume data reflects of “best approximation of price and volume” based on available data.

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.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 505 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Bitcoin

Bitcoin Price Holds Steady as Market Dominance Hits 3 1/2 Month High

Published

on

The bitcoin price was undeterred by a wider slump in crypto assets Friday, with its share of the total market reaching the highest level since early April.

Bitcoin Price Update

On a 24-hour basis, bitcoin’s price is little changed Friday, with values continuing to hover north of $7,400. Coin values briefly surpassed $7,500 before reverting all the way back to the low $7,400 region.

The largest digital currency by market capitalization booked most of its gains in the span of 24 hours on Tuesday and Wednesday. The uptrend followed a week-long consolidation where markets successfully defended the $6,000 price floor. A confluence of support later emerged near $6,400, propelling a short-term rally toward $7,000 and, eventually, a high near $7,600.

Bitcoin is on track for weekly gains of nearly 19%. Trade volumes have surged 40% week-over-week, including a peak of $6.8 billion.

Bitcoin Dominance Index

Bitcoin’s strength relative to other cryptocurrencies is exemplified by its growing share of the overall market. As of Friday, bitcoin accounted for 45.4% of the total market capitalization for cryptocurrencies, its highest since early Aprilm according to CoinMarketCap. The so-called bitcoin dominance index is up nearly 3 percentage points since Tuesday, when BTC/USD first broke out.

At nearly $128 billion, bitcoin’s market share is nearly three times that of Ethereum, the second largest cryptocurrency by value. Ethereum narrowed the gap to less than half last year, right around the time the bull market began to take off.

As last year’s bull market demonstrated, bitcoin’s dominance index usually declines during a major market uptrend as more capital flows into altcoins. However, the recent rally had the distinction of being largely concentrated in bitcoin. While this may bode well for long-term holders of the digital currency, it can also be viewed as a bearish sign for the overall market. That’s because altcoin price independence is considered an important feature of a healthy cryptocurrency market.

Measured by market cap, cryptocurrencies not named bitcoin (BTC) have gained 10.5% over the past seven days. By comparison, bitcoin’s total capitalization has increased nearly 19%.

Despite bitcoin’s outsized gains, the market is enjoying wider institutional support and important regulatory breakthroughs that could bring greater stability to the asset class. Business Insider and CCN have reported that Coinbase, one of the world’s major crypto exchanges, has scored a major institutional client. Although names have not been disclosed, the client is said to be a $20 billion hedge fund.

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.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 505 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

5 of 15 Seats Available

Learn more here.

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending