• Sat. May 21st, 2022

Bitcoin network grows, despite political and economic uncertainty

ByHazel R. Lang

Apr 15, 2022
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With the current political unrest in Europe and the inverted yield curve, it is indeed difficult to define the short-term trend of Bitcoin. -so, there could be volatility in the price action associated with the impending crisis. Meanwhile, the Miners Position Index (MPI) has surged recently, indicating the possibility of selling pressure from miners.

MPI started to rise as selling pressure from miners

The main factor affecting the MPI is the total amount of coins sent from the affiliated miners’ wallets, as the MPI is equal to the ratio of total miner outflows (USD) to its one-year moving average of total miner outflows (USD) . In particular, the approximation of 6,800 BTC transferred out of F2Pool currently corresponds to the catalyst.

Selling pressure from F2Pool exit

However, the “total costs” the sum of all fees paid to coin miners remains quite low as the hash rate has increased since the July 2021 low. This means that despite the low fees received by miners, the mining process has been competitive.

Miners engage in mining – although low fees

One of the common facets of on-chain analysis is looking at whether trades are actively executed through exchanges or OTC (over-the-counter) bureaus. As the following image shows, the number of incoming transactions on exchanges is relatively low, which means that sellers are not interested in trading their Bitcoin on exchanges.

Exchange incoming trades count downtrend

In the meantime, the fund flow ratio the ratio of coin transfers involving the exchange to all network-wide coin transfers remains low, while the total token transferred across the network is volatile. Therefore, there could be a lot of OTC deals in speculation. This is a good sign as some might buy BTC corresponding to the recent drop in Bitcoin price.

Low fund flow ratio and huge transferred tokens – over-the-counter speculative offers

Moreover, the number of active addresses of recipients is relatively larger than that of senders, indicating the possibility of more individual addresses buying Bitcoin.

The number of active sending and receiving addresses has increased and more recipients than senders

Additionally, the number of active addresses has been on the rise since the end of July 2021. Applying Metcalf’s law, where the value of a communication network is proportional to the square of the number of its users – the current intrinsic value of Bitcoin increases in terms of decentralization because it is proportional to the square of the number of active addresses. This can be seen as a good sign in the long run as Bitcoin has gained public interest.

The total number of active BTC addresses has been on the rise since July 2021

Therefore, the Bitcoin network is growing steadily, even though there is some political and economic uncertainty.

Dang Quan Vuong is a trader and market analyst at King Stock Capital Management and on-chain analyst at CryptoQuant and Santiment Vietnam.

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