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The 14-day exponential moving average (EMA) of the number of transactions taking place on the Bitcoin network reached its highest level since April 2021 earlier this month, according to data from cryptocurrency analytics firm Glassnode. The 14-day EMA recently crossed 300,000. Analysts and cryptocurrency market commentators are citing a recently deployed protocol called the Bitcoin NFT protocol. ordinal number.
According to Crypto Derivatives Firm BitMEXat 7th As of February, over 13,000 Ordinal NFTs had been minted directly onto the Bitcoin blockchain, occupying 526 MB of block space and associated with a spend of 6.77 BTC (worth approximately $150,000 at current prices). .
Deploying Ordinal NFTs directly onto the Bitcoin blockchain is controversial, with some claiming that it goes against the pseudonymous Bitcoin creator Satoshi Nakamoto’s original vision of using the Bitcoin blockchain for financial purposes only. There is also Whether or not you agree with the existence of his Bitcoin-based NFTs, they are gaining traction on the network.
Can ordinals lead to a broader rise in network activity that benefits Bitcoin’s price?
Bitcoin Network Fees Still Unaffected
Some analysts and commentators have expressed concern that the presence of the Ordinal NFT, which resulted in a large number of Bitcoin blocks hitting the 4MB limit, could put upward pressure on network fees. . However, according to Glassnode’s data, there has not yet been a noticeable increase in network charges.
Some argue that if Ordinal NFTs lead to higher Bitcoin network fees, this would be good for miners and a long-term positive for Bitcoin network security. Bitcoin miner earnings remain subdued compared to recent history, however, given that fees have yet to rise.Glassnode’s Z-score for miner earnings from his four years of fees is expected to rise by 2021. It has remained at a low level since July 2017.
Impact of Ordinal NFTs Bitcoin Network Activity on BTC Price
Given that Ordinal NFT has had minimal impact on network fees so far, we believe the impact of the controversial new protocol on BTC prices has been minimal so far. increase. Ordinals, on the other hand, has seen an increase in transaction traffic, but that doesn’t seem to affect his number of unique users per day on the Bitcoin blockchain.
Glassnode’s 14-day EMA of active addresses, defined by the company as “the number of unique addresses that were either senders or receivers on that day,” was around 940,000 as of the 8th.th It is approaching the range that has lasted for over a year and a half.
New Addresses Momentum, another indicator of network activity tracked by Glassnode analysts, has recently shown positive signs. However, this positive trend began in the fourth quarter of 2022, when the collapse of FTX sent Bitcoin prices to yearly lows and 1) users began to store cryptocurrencies from exchanges for the first time ( That means creating a lot of new wallets). ) and 2) attracted new users who want to buy dips.
The 30-day Simple Moving Average (SMA) for new addresses surpassed the 365-day SMA for new addresses in early November and has been doing so ever since.
As such, the emergence of Bitcoin NFTs via the ordinal protocol does not yet seem to have had enough of an impact on Bitcoin network activity and adoption to affect the price of the cryptocurrency. However, this is a brand new technology and we have yet to see its final impact on the Bitcoin network, and any Bitcoin investor should keep an eye on this space regardless of his feelings towards Bitcoin-based NFTs. I have.
