Bitcoin Hits 55k! | Let’s check the activity on the blockchain? | October 2021

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(Edited)

Bitcoin hit 55k at the moment of writing this, possibly starting another run in Q4 2021 that everyone is waiting for.
Let’s take a look how is this effecting the network. Is there increase in the numbers of transactions, new wallets, and the overall activity.

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We will be looking at:

  • Total number of wallets
  • Active wallets
  • Hash rate
  • Number of transactions
  • Fees

The data presented here is mostly gathered from the blockchains charts.

Number of Wallets

Here is the chart for the total number of Bitcoin wallets created.

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Bitcoin has around 77M wallets now. We can notice an increase in the last year or two, but lets take a look at the last year for better clarity.

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I find this chart a bid odd now. I’m even wondering is everything ok with the numbers 😊. Hope blockchain.info has it right. It is one of the most prominent explorers if not the no.1 for Bitcoin.

We can see a jump in the numbers of BTC wallet per day back in November 2020. Since then the numbers dropped and in the last days they are around 30k new wallets created per day.

Bitcoin price goes up, but the numbers of new wallets no?

One of the explanations for this would be that most of the newbies use custodial wallets, exchanges or some apps. Maybe the newbies are not going into bitcoin? Maybe just the big boys buy bitcoin, those are few, and most of the retail goes for other coins?
I guess its probably some mix of all the above, but I still find it strange that the numbers of new bitcoin wallets don’t follow the price at all.

The yearly chart for new bitcoin wallets

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*2021 is not finished yet.

Even with 2021 not finished yet, we can tell that the numbers for new wallets in 2021 will be lower then 2020. Almost 19M new wallets were added in 2020. Three more months to go and 2021 is just with 8M new wallets. Again not the numbers that you would expect in a year when BTC makes ATH.

Active wallets

How many of the are being used?
Here is the chart.

image007.png

The record high numbers for active Bitcoin wallets per day was reached in December 2017 with almost 1M active Bitcoin wallets. A sharp drop in 2018 to the 400k daily active wallets, and a steady growth since then.

This year we have seen an increase in April, reaching around 900k, but not a new ATH, then a drop and in the last weeks an increase again.

The numbers of active BTC wallets at least follow the price to some extent. But again we can see that the ATH for active wallets haven’t been broken from the last bull run, while the price has reached x3 from the previous ATH.

Hash Rate

The ultimate Bitcoin value is the network stability and security. The network security in a proof of work chains is measured in hash rate, or how difficult is to mine. The bigger the completion, the higher the hash rate.

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The has rate has been going mostly up, until June this year, when we can see a sharp drop. This is because of the ban on Chinese miners.

If we zoom in 2021 we get this.

image011.png

At the end of June, the hash rate dropped below 100M TH/s, more than half from its previous ATH of 180M TH/s.

Since then the hash rate has been recovering and now it is around 150M TH/s, gaining most of what was lost.

Transactions

The activity on the network is mostly represented by the number of daily transactions.

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After the price dropped in May and June, the transactions went down as well. In the last month there has been increase again and the numbers are close to 300k tx per day.

The ATH for the number of daily transactions is more than 400k and it has not been broken yet.

Fees

A bit unpopular topic the fees.

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The bitcoin fees are quite low these days, with only a few dollars per transaction. This especially when compared to Ethereum. We can see the increase up to 30$ per transactions back in April, but these days the fees are around the 3$ mark.


From the numbers of wallets and transactions, this bull run for Bitcoin seems to be led by institutions. Looks like retail is not as much into Bitcoin, or most of them use custodial wallets. Both the numbers of new, active wallets and even the numbers of transactions per day haven’t broken the previous ATH.

The hash rate remains healthy and growing fast after the China ban. A new ATH was set for the hash rate in 2021.

All the best
@dalz

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30 comments
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It seems like there is more new money coming in but not really more new users. But like you say…many are probably custodial wallets. My whole family has crypto and I’m the only one who isn’t just on coinbase.

Is the El Salvador app a custodial wallet? I’m guessing it is.

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Well there you go ... people use exchanges :)
As mentioned its proably some mix, more institutions, more custodial wallets etc

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It might be the case. Last week I had a little conversation with younger coworker. He was amazed I use something like a software wallet (dogecoin). He asked me weird questions.
"What is the fee when I create account on this wallet?"
"What is the fee when I withdraw?"

I was stunnned.

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Yea people use to the old standards.
Although eth fees might surprise some :)

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Yes, selfhelp, the app backed by the State here, named "Chivo", is a custodial one (I would think its servers are actually based in the US, its mother company being "Zapp Inc.", although I haven't seen information about their location).

I'd think that a small percentage of the Salvadorian population could begin using non custodial LN apps in the future, but it'll require many education efforts from our part (that we're structuring right now 🙂).

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Ahhh yeah it’s the same company that’s helping with twitters lightning network right?

Btw. I didn’t even know we had anyone from El Salvador on the platform. Nice!

I run Hive Cross Culture. Let me know if you need any help onboarding more people over there. I would love to see more people from the most crypto friendly nation benefiting from everything crypto has to offer

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(Edited)

True, "Zapp Inc." has converted into the main LN custodial solution provider for third parties, with all the advantages and drawbacks such a dominant position carries (e.g. I consider the KYC aspect on "Strike" and on "Twitter" could be optional, only for people wanting to cash out their BTC, something that's not at all so important, now that any BTC user here may find a wide array of daily products and services to buy without using fiat).

Thanks for your kind words! I've been sporadically active here, and plan to publish and engage with other Hivers on a more frequent basis now.

As far as onboarding more Salvadorians is concerned, of course!! I've set up a "Telegram" group where we horizontally share BTC users experiences and analysis, and may echo your gentle invitation - it's a Spanish speaking group, though :-)

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Don't know how much use I'll be in the telegram group, but I'll let my Venezuelan friends know and try to help anyone who joins feel welcome :-) If anyone can do bilingual posts (even with a translator app), we can curate them if it's good content. I think Hive will be very welcome to El Salvadorians, even more than other countries right now. ;-)

Hope you stay active too. I saw you are an old timer here ;-) This place is so much better than it used to be :-D

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(Edited)

True, it seems to have improved a lot! I've been quite active on Steemit for more than a year, back in 2018, being involved in a bunch of community Discord servers, and in the end harvested the equivalent of $10 for that whole year. Apparently now on Hive it's much easier to weave fertile connections and Community cooperations 😊.

Speaking of countries and cooperations, you do live in Japan, right? I ask because a friend who works in the Huobi exchange was telling a couple of days ago that the Chinese swiping away of their crypto-industry will force them to close operations there. I'd imagine a series of Chinese crypto-actors (both people and institutions) are on the verge of moving to Japan and Corea?

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Welcome back!

Yeah, I'm in Japan. It's possible they are moving to Japan, but I think a lot of them have been here all along. I would love to see bitcoin more readily available here. Right now, it's a complicated process to buy, but everything is a complicated process in Japan.

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(Edited)

Oh, I see! Isn't a peer-2-peer cryptocurrencies purchase app, like "Local Bitcoin", usable in Japan?

I've never traveled to your country, but have watched a bunch of videos about it recently, hehe. Many foreigners living there comment that Japanese people are utterly helpful, lovely and efficient individuals, and at the same time that they easily tend to be confused or lost in front of unprecedented or unusual situations :-) It gives the impression that huge reglementations make them confortable (I write "them", cause I guess you're not the "average Japanese citizen" 😉).

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(Edited)

I’m definitely not a citizen lol
Lovely and helpful maybe but I would not say efficient! Quite the opposite. They just work long hours and do everything very seriously.

I think there are people doing local bitcoin but I don't know if it's legal or reliable. It's certainly not commonly used.

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Wooow... As a confirmation of your comments, I see that the total number of BTC ATM in Japan is... 1 (at least if that website's data is correct). Hope you do live in Tokyo 😄.

Source: https://coinatmradar.com/country/107/bitcoin-atm-japan/

Bitcoin ATM Japan – find bitcoin machine locations - coinatmradar.com.png

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There were a lot of ATMs here while I took my 6 year break from Japan 2012-2018, but then they became illegal even though bitcoin is legal as payment here, exchange to local currency is heavily regulated.

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Heellooo @dalz , and very nice to Hive you! 😃

Thanks a lot for this BTC data breakdown.

Regarding the figures of new wallets, yes, unfortunately, there's no doubt that most of the people who've adopted BTC recently - in particular here, in El Salvador - have installed a custodial app, like "Strike" ("Chivo" here), hence not reflecting in the onchain addresses creation.

Nevertheless, 30k to 40k new BTC accounts per day in October is very encouraging, in my opinion, in a context where China is shifting back to the "real economy" and smashing everything crypto-related.

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Hey!
Great to hear from a first hand how things works in El Salvador. Obviously the ease of use from custian apps is making its thing. Hope it all works well in the end.

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Exactly, the tradeoff has been bending in favor of the ease of use. We're now impulsing grassroots initiatives to get "back to the basics" and provide many citizens with the bigger picture, of what are blockchain mechanisms, decentralisation vs centralisation, fiat vs crypto, and so forth, so that a portion of them would adopt wallets like Breez, Muun, etc.

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What many people don't realize is that whales can move funds for a specific action, prematurely. A whale moving coins to an exchange now because he expects an accelerated move to 60K and above, may cause the market to think that he is going to sell. However, he may not want to miss the accelerated move to 60K and so is actually waiting.

This can create false signals based on foundational technical analysis. Traders will always look for ways to fool the masses as well. That's the game.

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What does ltc and bch look like?
I stopped using btc when the btm's started offering bch and ltc.
I'm gonna guess that alot of new money goes into those two for the lower fees and faster transactions.

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Quality analysis as always.

From the numbers of wallets and transactions, this bull run for Bitcoin seems to be led by institutions. Looks like retail is not as much into Bitcoin, or most of them use custodial wallets. Both the numbers of new, active wallets and even the numbers of transactions per day haven’t broken the previous ATH.

This.

For all the talk about the Bitcoin bull run that we're in, I don't think we've really even started yet.

This is all still just smart, institutional money positioning themselves.

Wait until retail checks in again and they have some dumb money to provide liquidity.

Then we'll really see not only Bitcoin rally, but the entire crypto bull run REALLY begin.

So exciting to be a part of!

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Maybe just the big boys buy bitcoin, those are few, and most of the retail goes for other coins?

Hope this would happen a lot more. There's not much you can do with BTC. It doesn't change lives in any meaningful way. Real use cases like Dapps, censorship resistance etc. should get more attention.
!PIZZA

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Hi @dalz, thanks for this analysis! One of the few on-chain analysis I see around. Is there any metric to know if institutions are buying? I'd be really grateful if you know something. Thank you

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(Edited)

Do you think the hash rate affects the price or the opposite? A higher price incentivizes more miners to enter.
BTC miners in China had this coming for a while and should have been prepared. Some of them were not, though.
It was an event that was discussed a lot especially in 2017 when China banned the exchanges. Moreover, there is often a supply shortage in ASICs, and manufacturing will also be affected. Bitmain had their local miners accommodated first and often sending bad batches out of China.
Anyway, what I see is the hash power not being an indicator for the price to rise. It secures the network, but security didn't drop when the hashrate dropped to 2017 levels in May. It is just businesses entering a profitable field.

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