Diar Report Breaksdown Bitcoin’s On-Chain Transaction Volumes and Its 10-Month High Analysis


After months of declines, bitcoin’s on-chain transaction volume has hit a 10-month high, according to a new report from blockchain data provider TokenAnalyst.

The report, discussed in this week’s issue of Diar, shows that real bitcoin trading volume has risen three months in a row. In April, on-chain transaction volume hit a 10-month high as bitcoin surged in price once again.

TokenAnalyst defines ‘real’ bitcoin trading volume as the USD value of all on-chain transactions minus change transactions. Although the news is encouraging, TokenAnalyst cautioned that the rise in volume was caused by bitcoin’s recent price surge instead of a rise in actual use cases for bitcoin.

In other words, more on-chain USD trading volume doesn’t mean more bitcoins were transferred. Nevertheless, more on-chain transaction volume in either USD or BTC is generally seen as good news for bitcoin.

Bitcoin’s transaction volume spiked in mid-2017 as bitcoin became a household term for the first time in history. Ever since mid-2017, however, on-chain transaction volume had been declining. Critics have pointed towards bitcoin’s declining transaction volume as a sign that bitcoin’s bubble had burst.

Quarterly Numbers Tell a Different Story

Bitcoin’s on-chain transaction volume hit a 10-month high in April 2019. However, when looking at the bigger picture, bitcoin’s transaction volume has still declined quarter-by-quarter.

Q1 2019 had nearly double trading volume of Q1 2017. However, quarter-on-quarter on-chain bitcoin activity has been in decline since the end of Q4 2017. In Q4 2017, a total of $1.7 trillion USD worth of bitcoin was moved on-chain. By Q1 2018, that number had dropped to $940.3 billion, then to $497.5 billion by Q2 2018.

By Q1 2019, bitcoin’s on-chain transaction volume was a fraction of its 2017 high. A total of just $233.5 billion was moved on-chain in the quarter.

Bitcoin’s Monthly On-Chain Transaction Volume Hasn’t Been this High Since June 2018

Optimists, of course, will point to bitcoin’s month-by-month trading volume as reason for positivity.

Over the past 10 months, bitcoin’s monthly transaction volume has either dropped or remained stagnant month-by-month. In February 2019, bitcoin’s on-chain volume reached a multi-year low of $70.5 billion, a sharp drop from the $259.5 billion moved in February 2018 one year earlier.

In March 2019, however, bitcoin’s trading volume suddenly spiked to $87.7 billion, and then an even bigger spike occurred in April when on-chain volume surged to $132.6 billion.

Is This a Fluke? Or is the Bear Market Over?

There are two ways to look at this news. You can say the increased on-chain trading volume is the first sign that bitcoin’s bear market is over.

Or, you can say it’s a fluke, and that bitcoin’s on-chain trading volume remains lower than it did in 2017 when bitcoin reached its peak. You can argue that bitcoin’s higher on-chain transaction volume is linked more to the rise in the price of bitcoin (in USD) than in the rise of actual use cases.

We’ll wait to see where bitcoin’s on-chain trading volume goes in May 2019.

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