Bitcoin has been experiencing a remarkable resurgence in 2023, with daily transaction counts nearing all-time highs. The rise of inscriptions has played a crucial role in this development, making it essential for analysts to determine the extent to which inscriptions are driving this growth compared to monetary transfers.
A significant shift in the Bitcoin mempool has been observed this year, including a noticeable spike in fee pressure during the FTX crisis and sustained fee pressure throughout 2023. These plateaus correspond with three waves of inscriptions, as people rushed to register under the one million mark.
Inscription preferences have also evolved over time. Image inscriptions dominated the market until recently but have now been overtaken by text-based ones. To date, over 2.39 million inscriptions have been added to the Bitcoin ledger, accounting for 9.3 GB of data and generating 212 BTC in fees.
#Bitcoin daily transaction counts are approaching All-time-highs, seeing an explosive uptick in 2023.— glassnode (@glassnode) April 30, 2023
With the emergence of Inscriptions, analysts now need to assess how much of this is driven by Inscriptions vs monetary transfers.
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Inscriptions currently represent approximately 30-40% of mined transactions and 10-20% of fees paid. The majority of the remaining transactions are monetary, often conducted through exchanges.
Various methods can be employed to filter transfer volume on Bitcoin, such as raw unfiltered, change-adjusted and entity-adjusted. Across all three categories, volumes remain well below the 2021 bull market peaks but are more comparable to 2017 peak levels.
The long-term holder supply of Bitcoin is consistently reaching new all-time highs, with minimal expenditure by investors who bought during the FTX lows. These BTC HODLers maintain control, but on-chain activity remains light in volume and dominated by inscriptions.
Several aspects of Bitcoin's ecosystem are currently elevated, including transaction counts, address activity, inscriptions and mempool congestion. Additionally, the degree of HODLing and the supply acquired below $30,000 show strong conviction among investors.