On-chain transaction volume for Bitcoin (BTC) has reached levels three times greater than those seen in January 2019. The increased transaction volume has been hailed as a sign of network growth and viability.
For five weeks in January, on-chain transaction volume never reached above $20 billion. However, the last week of May showed transaction volumes at just above $60 billion.
While growth in Bitcoin transaction volume can be considered a metric for viability, some argue that the numbers are skewed. Considerations like transaction purpose, trading, and price make the numbers seem less bullish than they might appear.
Bitcoin did over $60 billion of on-chain tx volume last week.
That's over 3x the volume of any week in January 2019. pic.twitter.com/7tyy7OvXsL
— Kevin Rooke (@kerooke) June 4, 2019
Bitcoin (BTC): Price-to-Volume Ratio
The movement from $20 billion to $60 billion seems dramatic. However, some have argued that the change is not related to volume but rather to price. Substantial price increases would show large jumps in on-chain volume when evaluated using US dollars, rather than BTC.
However, a simple analysis proves this is not quite accurate. The price of Bitcoin (BTC) in January ranged between $3,400 and $3,800. The current price of Bitcoin has been between $7,500 and $8,000 over the past ten days. Tripling on-chain volume would require the price to triple as well. But the analysis above shows that the price only just more than doubled in those months.
While this proves that the increase is not simply price-related, it also reveals that the volume increase is not as dramatic as it may first appear. Certainly, transaction volume has grown. However, that growth is far more muted.
Where’s The Beef?
The question remains, then, regarding where the increased Bitcoin transaction volumes originate. Because the graph data considers only ‘on-chain’ volumes, trading is eliminated. This helpful excludes speculators from the market.
Possible sources could be the growth of the Lightning Network and mining increases. Others suggest that mixers (purchase and sale wallets designed to launder cryptocurrencies) are to blame.
Other sources are possible as well. Previous statistics have revealed that transactions in Venezuela and other struggling nations have spiked. Where fiat currency has failed, Bitcoin has stepped in to take its place to provide a viable payment method.
Taken together, the statistics do not show massive growth. However, what the numbers do reveal is that Bitcoin continues to gain ground as a payment methodology.
Think the growth in Bitcoin (BTC) transaction volumes is a sign of increasing adoption, or are the numbers skewed by other statistical issues? Let us know in the comments below!