The paper highlights Bitcoin’s real-time, global public ledger as a unique toolset and walks through some key on-chain metrics to understand.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.
In today’s Daily Dive, we’re highlighting the latest ARK Invest Bitcoin white paper, “On-Chain Data: A Framework To Evaluate Bitcoin.” The paper was authored by Yassine Elmandjra, analyst at ARK Invest and David Puell, on-chain analyst and market researcher. Both are leading analysts in the space with a history of exceptional work. We will summarize their recent white paper and provide some Deep Dive resources to supplement.
TLDR: The white paper’s aim is to help investors understand how to analyze and value bitcoin just like other traditional assets. The paper highlights Bitcoin’s real-time, global public ledger as a unique toolset and walks through some key on-chain metrics to understand.
Elmandjra and Puell start by breaking down on-chain data into three distinct layers across network health, buyer and seller behavior and asset valuation. Each layer is tailored to a different group of market participants.
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The network health layer covers monetary integrity, security and usage of the Bitcoin network. Evaluating address supply distribution, supply in addresses holding fewer than 10 BTC has increased since 2013.
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Transaction volume and velocity are ways to measure the health of the network. Transaction volume is approximately $53 million per day. Annual velocity reached a bottom in April 2021 which could be a result of investors diversifying into other cryptocurrency assets or because transaction activity is moving back on-chain.
For a deeper look into the total transaction volume of the network and the efficiency of the network, see The Daily Dive #108 – Bitcoin: The Most Efficient Value Settlement Network.
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