The number of on-chain bitcoin transfer has been on the rise since and August and peaked in the first ten days of September to a one-year high, says a report from Luno.
According to the report, the bitcoin network saw the highest transfer activity in over a year, with almost 3.5 million BTC transferred in a day.
On-chain transactions refer to those cryptocurrency transactions which occur on the blockchain – that is, on the records of the blockchain – and remain dependent on the state of the blockchain for their validity. All such on-chain transactions occur and are considered to be valid only when the blockchain is modified to reflect these transactions on the public ledger records.
On-chain transactions also come at a cost, as miners command a fee for offering their validation and authentication services for confirming a transaction on the blockchain in the shortest possible time. At times, this fee can go very high depending upon the network’s scalability potential and transaction volume. For instance, the high fee has led to the problem of Bitcoin Dust, where fractional amounts of bitcoins cannot be transacted due to high transaction fees.
Since the beginning of August, the daily number of transferred coins has increased by more than 200 percent. At the same time, the fund flow at exchanges is at a yearly low according to CryptoQuaint.
“This might suggest that we’re currently seeing a large amount of OTC deals, as the CEO of CryptoQuant (Ki Young-Ju) is suggesting,” said analysts at Luno. “A similar pattern was seen in February 2019, when OTC volume was high.”
The movement is usually considered a bullish sign but Young-Ju said the pattern is not ‘absolute’ hence should not be relied on in isolation. The transactions, he noted further, did not come from exchanges. Based on two on-chain metrics, he explained it could be a resurgence of OTC volume.
Bitcoin price has been on a slow recovery since it dropped from $12,000 to $10,000. At press time, bitcoin was exchanging hands at $10,834 on the CoinMarketCap index. In terms of market capitalisation, the largest cryptocurrency in the world remains the best performer of all the cryptocurrencies in September.
“A lot of the confidence in the market disappeared with the brutal drop at the beginning of the month,” said analysts at Luno. “After staying down in the ‘Fear’ area for 10 days, the fear is now subsiding. While market participants are more cautious than earlier this summer, we’re back in a more neutral state.”
