Bitcoin Rips Above $29,000, But Why Is The Mean Transaction Size At A 3-Year Low?

Dalmas Ngetich

1 year ago

3 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Bitcoin prices might be firmer when writing on May 4, rallying above $29,000 and breaking above local resistance levels in lower time frames. But the Mean Transaction Size, based on the 7-day moving average, is at a 3-year low, according to Glassnode, a blockchain analytics firm.

Bitcoin’s Mean Transaction Size Crashing

The Mean Transaction Size relays the average transaction size over a given period. It can be used as a lead to gauge the level of activity. Typically, the higher the demand for BTC, the better the prices.

Bitcoin Price On May 4| Source: BTCUSDT On Binance, TradingView

Considering the decentralized nature of public networks, including Bitcoin, transactions are packed in blocks before being confirmed and added to the longest chain.

The size of each Bitcoin block is fixed at 1 MB; therefore, the number of transactions that can be packed in a block directly depends on the size of each transaction. On average, BTC transactions can be between 300 and 400 bytes. Coupled with the set transaction processing time of roughly 10 minutes, transaction sizes, and by extension, the block size cap, directly impacts the network’s throughput.

A notable observation is that the mean transaction size in Bitcoin has been rapidly falling over the past few weeks. There was a sharp expansion from late January 2023 when the mean transaction size rose from around 590 to 1,195 in mid-February.

It then see-sawed in the following weeks, falling from 1,192 in late March to 820 in early April. It crashed to 467.949 on May 2, the lowest in three years.

📉 #Bitcoin $BTC Mean Transaction Size (7d MA) just reached a 3-year low of 467.949

Previous 3-year low of 468.425 was observed on 02 May 2023

View metric:https://t.co/PJ0bkLTuVs pic.twitter.com/WNZE2VmaOM

— glassnode alerts (@glassnodealerts) May 4, 2023

Blame The Ordinals

The initial expansion in late January could be attributed to the launch of the Bitcoin Ordinals platform. The portal allows individuals to attach files, including texts, images, and videos, to Satoshis. Afterward, these files are stored in Bitcoin blocks after being confirmed by miners.

Because each file is unique and exists as a transaction, every Ordinal stored in a Bitcoin block has been compared to non-fungible tokens (NFTs), though they are not technically NFTs. And Dune data shows that over 3.5 million inscriptions have been added to the Bitcoin network.

However, while the number continues to rise, there is a marked shift in the types of files attached. In the early days of the Bitcoin Ordinals, there were more images, which were bigger than texts and other files, such as audio or applications.

Over the months, this has changed, and there are more text inscriptions. Texts are smaller in size than, for example, images or videos.

As such, this might explain the rapid drop in the mean transaction size based on the 7-day moving average, especially over the last few weeks from April 2023.

Feature Image From Canva, Chart From TradingView

Dalmas Ngetich

Dalmas, a seasoned crypto reporter, brings a unique perspective to the industry. His specialization in NFTs, blockchain, DeFi, and blockchain news for NewsBTC, combined with a background in mechanical engineering and over a decade of experience in journalism, has allowed him to craft over 10,000 news and feature articles over the past eight years. His diverse range of topics, including technology, Forex, and finance, reflects his comprehensive understanding of the crypto landscape.

His technical expertise and analytical skills have been recognized and featured by leading news outlets such as Investing.com, CoinTelegraph, Entrepreneur, Forbes, and other authority sites. Notably, he broke key news, including the Ripple and MoneyGram partnership, cementing his position as a thought leader in crypto.
The news exploded. Over 100,000 people devoured this meticulously crafted report, from seasoned investors to curious newcomers. His analysis wasn't just dry facts and figures; it crackled with insight, dissecting the implications of the partnership and its potential impact on the future of finance.

His deep understanding of the financial markets, technological advancements, and blockchain developments has made him a respected voice in the industry.

Dalmas is also the founder of BTC-Pulse, a crypto news site, further demonstrating his commitment to the field. He firmly believes that DeFi and NFTs are here to stay and will continue to drive financial inclusion.

Coming from Nairobi, Kenya, it is easy to see the source of his inspiration: Across Africa, millions lack access to traditional banks. Remote villages, limited documentation, and high minimum balances create insurmountable barriers.

DeFi, not just Maker or Aave, for example, but think of Bitcoin and USDT, cuts out the middleman. Forget banks with their limitations.
Even so, DeFi isn't a magic solution. The continent still struggles with reliable internet access, and educational campaigns highlighting the benefits of this wonderful solution are insufficient. Moreover, even for those interested, understanding DeFi can look like learning a new language.

Dalmas is here to help make the tech easy to understand and digestible, even for beginners.
The story of DeFi in Africa is still being written. Challenges abound, but the promise of a more inclusive financial future is a powerful motivator. With innovation and collaboration, Dalmas firmly believes that DeFi could become the key to unlocking Africa's full economic potential.
This possibility and its immense value motivate Dalmas to continue breaking key DeFi innovations and more across the globe. His engineering background further enhances his ability to deliver well-thought-out pieces that blend technical insight with clear, impactful reporting.

Beyond his professional achievements, Dalmas is deeply passionate about technology and politics. Policies drive adoption, and being at the forefront and keeping up with how they evolve is crucial for the sphere to mature.

When Dalmas is not closely monitoring the latest crypto events, he can be found in nature, exploring the picturesque countryside, and traveling with his family and friends. His love for adventure and discovery perfectly complements his investigative and reporting skills.
You can connect with Dalmas on X: @Dalmas_Ngetich, or contact him on Telegram @Dalmas_Ngetich.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.