Diving deep into the thirteen-year-old Bitcoin (BTC) ecosystem makes one come across interesting patterns powered organically by investor sentiment and market conditions. With BTC’s per transaction cost coming down to $56.846 on July 14, the ecosystem unveiled a cycle wherein the per transaction costs invariably fall every four years.
The cost per Bitcoin transaction is calculated by dividing miners' revenue by the number of transactions, thus implying an unpredictive trend — however, data from Blockchain.com reveals a pattern many would find satisfying.
The cost per transaction dropped over 81% in July 2022 from its all-time high of $300.331 in May 2021, factored by a combination of a prolonged bear market and fewer on-chain transactions due to regulatory hurdles imposed on the general investors.
However, the rise and fall of the cost per transaction is a pattern seen every four years. Ever since its launch in 2009, Bitcoin’s cost per transaction went through its rollercoaster cycle three times — in 2014, 2018 and 2022.
If history were to repeat itself regardless of market conditions, the cost per transaction would overshadow the current all-time high by 2026, which would be accompanied by an eventual downfall around the $50 range.
Overall, miners’ revenue has also seen a significant reduction throughout the year 2022, with July marking the month of lowest income from Bitcoin mining in over two years.
Impacted by the falling market prices, Bitcoin miners found themselves barely making profits owing to the high operating costs associated with BTC mining. However, falling graphic cards or GPU prices are set to offset the losses as miners get access to affordable mining hardware.
With card manufacturers resuming operations following the end of the global chip shortage, GPU prices declined massively, with some cards selling for below MSRPs. In May 2022, mining hardware prices dropped over 15% on average as supply exceeded the market demand.
While the critics cast doubts on some of blockchain’s use cases during the crypto winter, one of the most prominent community figures laid out some points that cement blockchain’s position as a disruptive technology.
On Twitter, FTX crypto exchange CEO Sam Bankman-Fried highlighted use cases for blockchain and explained how some industries could benefit from integrating the tech. According to Bankman-Fried, blockchain technology can simplify payments, solve stock market flaws and revolutionize social media.
Bankman-Fried said that there are many issues surrounding cross-border payments. The FTX CEO laid out several examples that highlighted long waiting times and intermediaries that make the fees higher and often add uncertainty to transactions.
According to the executive, blockchain solves this long-standing issue in finance by replacing the lengthy traditional process with a simple three-step process of the sender creating a wallet, the receiver creating a wallet and then sending the balance through. Bankman-Fried argued that this eliminates the waiting time, replaces the fee structure and solves the uncertainty factor.
Apart from this, the FTX CEO also pointed out that blockchain can change the entire stock trading process which has its fair share of flaws. Highlighting issues met with the infamous GameStop short-squeeze where retailers shut down because of settlement risks, Bankman-Fried said that tokenizing stocks is the answer.
The executive argued that similar to the solutions to payments, tokenized stock trading executed on a blockchain can complete the transactions in a matter of seconds, and reduce settlement uncertainty with much lower fee structures.
Lastly, the FTX CEO said that social media is isolated and not interoperable. The executive brought up how a single user has to go through many apps to manage various platform-specific applications.
Bankman-Fried argued that blockchain can potentially make social media more interoperable, allowing messaging across various platforms. Through the use of public chains, the relaying of messages from one social platform to another is possible according to the executive.
The majority of Bitcoin (BTC) has been hodled for at least three months in behavior bearing a striking resemblance to previous Bitcoin market bottoms, says blockchain analytics firm Glassnode.
In a Saturday tweet, Glassnode noted that more than 80% of the total U.S. dollar-denominated wealth invested in Bitcoin has not been touched for at least three months.
This signifies that the “majority of BTC coin supply is dormant” and that hodlers are “increasingly unwilling to spend at lower prices,” said the firm.
Bitcoin’s price is $21,013 at the time of writing, down almost 70% from its all-time high of $69,044 in November 2021. The current price puts around 45% of Bitcoin holders with an on-paper loss, according to crypto intelligence firm IntoTheBlock.
According to the Glassnode chart, other times that saw similar levels of Bitcoin hodling were during the end of the bear markets of 2012, 2015 and 2018.
Last week, Coinbase’s head of institutional research, David Duong, wrote in a July 12 report titled “The Elusive Bottom” that on-chain data suggests that recent BTC selling has been carried out “almost exclusively” by short-term speculators. Long-term BTC holders “have not been selling into the market weakness,” he added.
“These holders own a highly concentrated ~77% of the total supply, which is down slightly from 80% to start the year but still quite high,” he explained before adding:
“We see this is a positive sentiment indicator as we believe these holders are less likely to sell BTC during turbulent periods.”
Earlier this month, Glassnode analysts noted that the Bitcoin market had seen an almost complete purge of “tourists,” noting that activity on the network is at levels concurrent with the deepest part of the bear market in 2018 and 2019.
Glassnode revealed that the number of active addresses and entities had seen a downtrend since November 2021, implying new and existing investors alike are not interacting with the network.
Additionally, the number of non-zero BTC addresses has reached an all-time high of 42,530,652, according to the firm.
This Daily Dose was brought to you by Cointelegraph.