Zack Morris | Research Analyst
Apr 4, 2024
Adoption, as measured by total on-chain addresses with a non-zero balance, increased 13% year-over-year to 51.3 million:
Decentralization, as measured by reachable nodes, increased 5% to 18,293. Reachable nodes hit an all-time high of 18,572 during the quarter:
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Security, as measured by hash-rate, increased 81% to an all-time high of 599 EH/s (exa-hashes per second) to end Q1:
Adoption, decentralization, and security are perhaps the three most important Bitcoin fundamental indicators to monitor. Bitcoin, like any monetary system, is a network, and the value of any network grows exponentially as users are added to the network.
As illustrated by the charts above, users and hash-rate have increased almost without interruption during Bitcoin’s 15 year history, through both bull and bear markets. Still, that we’ve only just crossed over 50 million addresses shows how early we still are on the adoption curve for a global monetary network.
So long as Bitcoin remains decentralized and secure, one can find confidence in continued future adoption.
One noticeably lagging on-chain fundamental metric in 2023 was total transaction volume. In Q1, however, on-chain volume bounced back to $795 billion, an increase of 152% year-over-year and 69% sequentially. It was the largest quarter of on-chain volume since Q3 2022.
Total number of transactions fell sequentially, however, likely due to waning enthusiasm in ordinals and inscriptions, which drove the increase in on-chain transactions in 2023.
Despite the drop-off from last quarter, transactions still increased 37% year-over-year.
Courtesy of Pierre Rochard on X:
Similar to how bitcoin has not yet set a new inflation adjusted all-time high, nor has it yet set a new all-time high as a percentage of total federal debt. It is a reminder that while we use the USD as our unit of account, it is a measuring stick which is always changing in size.
“Most of the problems that people attribute to deflation, are instead about debt building up during periods of structural inflation and then experiencing one big catastrophic period of deflation as that all gets exhausted.
They then consider deflation itself to be bad.”
as of 4/3/24:
Source: Onramp, Koyfin. 3-, 5-year figures annualized.
Bitcoin fell 4% on the week as the market continues to digest the Q1 rally to new all-time highs. Stocks fell as rates ticked higher. Gold continued its breakout to new all-time highs. Oil rallied above $85 a barrel, a level last seen last October. It is now the 2nd best performing asset class year-to-date behind bitcoin.
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Until next week,
Zack Morris