On-chain data shows the utility on the Bitcoin network has been making a comeback recently, something that could pave way for another price rally.
Bitcoin Circulation Has Spiked To Highest Levels In 5 Months
In a new post on X, the on-chain analytics firm Santiment has discussed about the latest trend in the “Circulation” of Bitcoin. The Circulation here refers to an indicator that keeps track of the unique number of tokens that are moving on the BTC blockchain every day.
Related Reading: Bitcoin Is Flowing Into US Platforms: Here’s What Happened Last Time
Often, to gauge utility on the network, the transaction volume is used, which is a metric that measures the daily total amount of BTC being transferred on the network.
The con with this indicator, however, is that there is generally a lot of trading activity occurring on the chain where the same tokens move back and forth. Such activity may not be reflective of the true utility on the network, so the transaction volume can provide a skewed representation of the chain.
The Circulation sort of solves this issue by giving every token that has transacted on the network the same weightage, regardless of how many times it may have moved.
When the value of this indicator is high, it means the users are moving around large amounts of unique coins right now. This kind of trend implies interest in blockchain activities is high among the investors.
Now, here is a chart that shows the trend in Bitcoin Circulation over the last few months:
The value of the metric appears to have spiked to high values recently | Source: Santiment on X
As is visible in the above graph, the Bitcoin Circulation has observed notable spikes recently. This growth in the indicator has come after a period of relatively low activity on the network, so it would appear that interest in using the cryptocurrency is making a return among the investors.
The latest spike in the indicator, which has been the largest in this period of renewed activity, saw a movement of 244,000 unique tokens on the blockchain. This is the largest spike observed since March 5th, when BTC was in the middle of its rally to an all-time high (ATH).
Generally, utility tends to go up during bullish periods, as investors start paying more attention to the cryptocurrency. This activity in turn then provides for a foundation for sustained surges to occur.
The fact that the Circulation had slumped to low levels after the asset’s top may explain why the coin had found struggle in putting together any further lasting bullish momentum. In the recent recovery effort, though, things appear to have been different so far.
“Utility is gradually returning back to levels last seen during the bull run in Q1,” notes the analytics firm. It now remains to be seen whether this activity would play to the benefit of the asset’s price this time around as well or not.
BTC Price
Bitcoin had recovered near $70,000 earlier in the week, but the asset appears to have seen a setback as it’s now trading around $66,000.
Looks like the price of the coin has gone through a drawdown over the last few days | Source: BTCUSD on TradingView