Normal NFTs Push Bitcoin Network Activity To Near 2-year High – What Does This Mean for the BTC price?
According to data from Glassnode, the 14-Day Exponential moving average (EMA) of the total number of transactions on the Bitcoin network reached its highest point since April 2021. Analysts and commentators in the cryptocurrency market cited recently implemented Bitcoin NFT protocol as the reason for the increase in transactions’ 14-Day EMA. Ordinals.
According to the crypto derivatives firm BitMEXAs of the 7Th Over 13,000 Ordinal NFTs were minted onto the Bitcoin blockchain in February. They took up 526MB block space and were associated with a transaction of 6.77 BTC, which is approximately $150,000 at current prices.
Some have criticized the deployment of Ordinal NFTs directly onto Bitcoin’s blockchain. They claim it goes against Satoshi Nakamoto, the pseudonymous Bitcoin creator. They are making an impact on the network, regardless of whether you agree or disagree with their existence.
Can Ordinals lead to a greater uptake in network activity, which benefits the Bitcoin price
Bitcoin Network Fees Are Not Yet Impacted
Analysts and commentators are concerned that the Ordinal NFTs might increase network fees. This has led to many Bitcoin blocks exceeding the 4MB limit. Glassnode data shows that there has not been an increase in network fees.
Some argue that Ordinal NFTs could lead to an increase in Bitcoin network fees. This could be good news for miners and a long-term benefit for the Bitcoin network’s security. Bitcoin miner revenue is still low relative to its past history, as fees have not increased. Glassnode’s Z-Score of Miner Income from Fees over the past four years is close to its lows, which it has maintained since July 2021.
How the NFTs (ordinary) Bitcoin Network Activity Could Impact the BTC Prices
The Ordinal NFTs have had minimal effect on network fees so it is likely that there has been little impact on the BTC’s price. Despite increasing transaction traffic, Ordinals has not had an impact on the number and unique users of Bitcoin blockchain daily.
Glassnode’s 14 Day EMA of Active addresses, which the firm defines to be “the number of unique address that were either a receiver or sender that day”, was approximately 940,000 at the 8Th February was within the same range it has been in for more than a year and half.
Glassnode analysts have been seeing positive signs in New Addresses Momentum as a sign of network activity. This positive trend started in Q4 2022, when the collapse in FTX triggered a plunge in Bitcoin prices to new annual lows. This 1) encouraged users to get custody of their cryptos from exchanges (meaning lots more wallet creation) and (2) attracted new users who wanted the dip.
In early November, the 30-day Simple Moving Average (SMA), of new addresses surpassed the 365-Day SMA and has remained above it since.
It seems that Bitcoin NFTs through the Ordinals protocol have not had enough impact on Bitcoin network activity or adoption to affect the price of the cryptocurrency. This is a new technology, and the impact it will have on Bitcoin’s network remains to be seen. This space should be watched by Bitcoin investors, regardless how they feel about NFTs based on Bitcoin.