This Bitcoin Metric Peaks Again: Will BTC Hit $60,000 As Before?
27 Oktober 2023 - 10:00PM
NEWSBTC
The price of Bitcoin stands firm around the critical area of
$34,000, hinting at further bullish potential. However, market
analysts wonder if enough clues point to the upside or if BTC will
return to $20,000. Related Reading: Bitcoin Price Rally: Analyst
Sets $45,000 Target And It’s Closer Than You Think As of this
writing, BTC trades at $34,150 with sideways movement in the last
24 hours. The cryptocurrency recorded a 15% profit the previous
week and remains a top coin performer by market cap. Bitcoin
On-Chain Activity Rises Hinting At A Bull Run? Data from the
analytics platform mempool.space shows an increase in on-chain
activity on the Bitcoin network. This spike occurred in February
2023, when BTC transactions rose above 50 Mega Virtual bytes (MvB).
According to the analytics platform, the above metric measures the
size of transactions and blocks on the BTC network. The larger the
transaction, the more space they required. As seen in the chart
below, each time there is a rise in the price of BTC, there is a
surge of activity leading to the rally. This happened in 2017, and
2021, and it is happening this year, which suggests the ecosystem
is blooming, onboarding more users, and preparing for a more
significant rally like in the previous year. In addition to the
increase in activity, it is possible to see the decline in the
metric during the bear market and conclude bull markets record high
activity. In contrast, the bear market records much less user
activity, and they are generally cheaper to transact. However,
unlike 2017 and 2021, this year, this ecosystem saw the
implementation of non-fungible tokens (NFTs) and new applications
boosting these metrics. Thus, it is harder to determine if the
current rally can reach similar levels than in previous years as
the BTC DeFi ecosystem attracts more users looking to leverage the
network for utility rather than long-term investing. BTC DeFi Makes
A Difference In Key BTC Metric? A Chat With The Team Behind
“Leather” The surge in BTC on-chain activity could be attributed to
the cyclical nature of the crypto market. When the price of BTC and
others rise, or there is an expectation of further profits, more
users on-board the network. As a result, the number of transactions
recorded increases. However, many believe that with the
implementation of NFTs in the BTC ecosystem, transaction activity
can no longer be attributed to a new bullish cycle. Related
Reading: XRP Price Could Blast Off In 18 Days, Here’s Why If so,
rising activity metrics could become useless when measuring the
sustainability of a BTC rally. To answer this question, we spoke
with Mark Hendrickson, a General Manager at Trust Machines, a
company working on a Bitcoin DeFi wallet. This is what he told us:
What is “Leather,” and what is your goal in the Bitcoin ecosystem?
A: Leather is a web3 wallets built around Bitcoin based
technologies and applications. And so you can think of Leather,
simply put as MetaMask for Bitcoin in the sense that we want to
provide a robust user experience for connecting to applications
built with Bitcoin and Bitcoin layers in which users can do a lot
of the same sort of things that they can concurrently only do on
smart contracts enabled L1 chains, but to do them actually on
Bitcoin. So, Leather has the ability to connect the applications,
identify yourself to those applications based on your Bitcoin
addresses and your associated assets with those applications
prompts for signed transactions that are essentially actions for
those applications and to do so across layers. (…) We also want to
facilitate the movement of liquidity between L1 and L2 (networks)
and do so in a very seamless manner. A lot of people, for
many reasons, are unfamiliar with the Bitcoin DeFi ecosystem. Can
you tell us more about it, and what is Leather’s role in it? Also,
what do you say to users who want Bitcoin to remain unchanged, the
way it has been since its inception in 2009? A: Bitcoin based DeFi,
I’d say is generally taking place these days or sort of emerging in
two places. You have primitives for Bitcoin based divide on Bitcoin
itself. That’s an L1 (Layer one), mostly driven by Ordinals and
within Ordinals fungible token standards like BRC 20. And then you
have also Bitcoin related taking place on Layer2 like Stacks that
have smart contract functionality. (…) most of that’s taking place
via Ordinals on the layers. It’s taking place mostly through the
native smart contracting capabilities of those layers. To the
question of people who want Bitcoin to remain unchanged, I think
that the folks who are working on Bitcoin-related functionality,
I’d say Bitcoin web3 in general, which includes DeFi. We’re trying
actually to do more with Bitcoin without having to change Bitcoin
really at all. So actually our general approach is to try to extend
what you can do with Bitcoin without having to change it
fundamentally because we do, of course, want to respect all the
work that’s gone into Bitcoin to date and we’d love the security
profile of Bitcoin. And that has to do with taking a relatively
conservative approach. And so if you look at Ordinals, for example,
which is really an innovation based on taproot introduced fairly
recently, there’s a lot of innovation going on as a result of
taproot ordinals without having really changed anything else about
Bitcoin. It is a design space that is actually quite respectful of
Bitcoin as blockchain. There is a theory that every bull run
is preceded by an increase in on-chain activity, with fees
following prices on their way to new highs. What do you think of
network activity right now? Do you think much of it can now be
attributed to Ordinals and other applications? A: Going back to the
start of the year, Ordinals has been a huge exception to the
general rule of the crypto bear market because we’ve experienced
essentially two bull runs inside of Ordinals itself, which I think
have boosted Bitcoin’s position and definitely has boosted network
activity on Bitcoin and fee rates have gone up as a result of it.
And really shown that this idea of storing data on chain on Bitcoin
beyond just simple transactions and applying those primitives to
various web3 applications, whether it’s art or whether it’s new
token standards, that can have a huge effect on just how Bitcoin is
used and also valued. (…) it’s hard for me to really pinpoint any
given reason why any given month the Bitcoin may have gone up in
price because of other factors, but it, it’s pretty clear that it
has an overall effect (on network activity). Ordinals has been a
positive influence on the interest in Bitcoin. ETFs, store
of value, Gold 2.0, Halving, and now Bitcoin DeFi, what is the
current narrative dominating the BTC market? And which narrative
will gain more prominence in the long run? A: I think the dominant
narrative around Bitcoin is probably that in the wake of the last
crash, really it’s a spillover from last year. I think there are a
lot of weaker technologies, weaker platforms and assets that were
shaken out and people ran away from and they’ve taken more safe
harbor and Bitcoin come back to Bitcoin as really the one that’s
stood the test of time. So that combined with the fact that people,
since the start of the year with Ordinals in particular have opened
up to that there are more frontiers to what you can do with
Bitcoin. I think that combination has really driven sort of a
renewed enthusiasm around Bitcoin. It’s a combination of, it’s been
around the longest, it’s the most secure, plus it’s not a dinosaur
that can’t evolve still. It actually has a lot of potential. It
actually has both of those qualities that are very attractive,
secure and conservative in one way, but it’s also more innovative
and there’s more potential than people had realized before on the
other hand. Cover image from Unsplash, chart from Tradingview
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