Uncover the Truth About Bitcoin Volume with Glassnode

Entity-Adjusted Approach for Bitcoin Volume

Glassnode's latest weekly report discusses how some metrics at the core of the Bitcoin network have changed. The "Transfer Volume" measures the total amount of cryptocurrency involved in daily transactions on the blockchain. As shown in the chart, the cumulative value of this metric has developed over time. During the last cycle, the cumulative Bitcoin Transfer Volume (colored in green) rose sharply, but it has slowed down in the new cycle. Despite this, it has now crossed the $131 trillion mark. It's important to note that the volume is calculated based on the USD value at the time of transaction execution, not the total BTC volume converted at the current exchange rate.

In the same chart, Glassnode also presents the data of another metric - the Entity-Adjusted Transfer Volume. This indicator calculates the cumulative Transfer Volume between different entities. An 'entity' refers to a cluster of addresses determined by the analytics firm to belong to the same investor. Transactions between addresses of the same holder are not relevant to the wider market, so Entity-Adjusted metrics provide a more accurate representation of trading activity. "After applying entity adjustment, the filtered transfer volume stands at $11.63 trillion, just 8.86% of the total," notes Glassnode. This means that less than 9% of the total Bitcoin volume involves transfers with economic significance.

Comparison of Unfiltered and Entity-Adjusted Transaction Counts

A chart from the same report shows the data in the cumulative Transaction Count for Bitcoin, both the unfiltered and Entity-Adjusted versions. As displayed in the graph, although the unfiltered Transaction Count for Bitcoin is still greater, it doesn't have a significant difference from the Entity-Adjusted metric. This implies that the 840 million transfers between different entities make up only 8.8% of the Transfer Volume. The takeaway is that the volume inflation mainly comes from internal management by centralized exchanges, as these platforms hold large amounts and their volume is also high.

While these transfers may not directly impact Bitcoin price action, they are still 'real' transactions from the network's perspective and have a visible impact on miner transaction fee revenue.

Current Bitcoin Price

At the time of writing, Bitcoin is trading around $101,100, down almost 2% over the last week. The price of the coin appears to have surged in the last two days. Featured image from Dall-E, Glassnode.com, and chart from TradingView.com provide additional visual context.