The resurgence of Bitcoin ordinal inscriptions has caused a surge in network transactions. Glassnode, an on-chain analytics provider, reported on May 1 that daily transactions were nearing peak levels. The metric’s 30-day moving average had climbed to 348,700 daily transactions, approaching the 2017 peak of 379,000 transactions per day on average. However, Blockchain.com revealed that the actual daily transaction count had soared to 426,814 on April 30. Since the beginning of the year, it has increased by over 70%.
#Bitcoin daily transaction counts are approaching All-time-highs, seeing an explosive uptick in 2023.
With the emergence of Inscriptions, analysts now need to assess how much of this is driven by Inscriptions vs monetary transfers.
A quick 🧵 to explore pic.twitter.com/v1cnr5GmZZ
— glassnode (@glassnode) April 30, 2023
Ordinal Inscription Revival
The increase in network transactions is attributed to ordinal inscriptions, which account for about 30% to 40% of mined transactions and 10% to 20% of fees paid, according to Glassnode. The majority of transactions involve monetary transfers, often through exchanges. Despite this, BTC exchange activity is relatively low, making up only about 30% of fees and transactions. Ordinal inscriptions are similar to non-fungible tokens and are crypto assets that can be inscribed into one Satoshi. The Bitcoin SegWit and Taproot updates have enabled ordinal users to add 3MB of data to each block, compared to the original limit of 1MB per block. In February, users began inscribing NFTs to satoshis, and though the recent revival is dominated by text-based inscriptions, it has still caused a craze.
Glassnode concludes that Bitcoin transaction counts, address activity, inscriptions, and mempool congestion are all elevated, and HODLing and the supply acquired below $30,000 have increased. The conviction that BTC will remain popular remains high.
In late April, Grayscale, a crypto asset manager, also reported on the ordinals craze, stating that the “unexpected surge in popularity may indicate a shift in the broader perception of Bitcoin, despite its reputation as an ossified blockchain.”
Bitcoin Price Outlook
Bitcoin prices fell a couple of percent to an intraday low of $28,300 during Monday’s Asian trading session, a decline from their weekend plateau of around $29,300, according to CoinGecko. The asset has fallen to its lowest price since last Thursday’s panic sell-off, and further losses could result in a fall to support just over the $28,000 level. BTC remains down 58% from its peak price levels in November 2021, and the correction could well deepen before there is any transition to a bull cycle.
