Bitcoin’s bull run this year may have been driven by improving fundamentals, industry website Coindesk has suggested, pointing to a new metric.
In a new report, published earlier today, the online publication noted that an experimental metric called the Transaction Amount to Active Addresses Ratio (TAAR) had hit a 28-week last Saturday. The metric is used to gauge the quantity and quality of activity on the Bitcoin network, Coindesk said.
“[TAAR] divides bitcoin’s 24-hour adjusted transaction volume (USD) by the number of its active addresses to identify how much each active address spends in transactions per day on average,” the website said.
Coindesk further explained that if the metric is high, it means that each user was transacting in high notional values. This in turns to high network “quantity” (how much is being spent) per the “quality” (how many users are spending the funds) of the network.
Historical data gathered since April 2013 shows that then the quality and the quantity of the network is high it is usually accompanied by a positive market reaction and vice versa.
Bitcoin has enjoyed big gains in the past four months and especially in May, when it increased its value by some 60%. However, the coin experienced a significant correction during the first two sessions of this week, when its price plunged below the $8,000 mark. The digital currency has since managed to weathered the storm, but still lacks the necessary momentum to reclaim the $8,000 level.
In today’s trading, the Bitcoin price stood at $7,714, as of 16:00 BST. The digital coin has lost 0.5% of its value in the past 24 hours, according to data from digital currency tracker Coinmarketcap. The coin’s total market capitalisation currently stands at $136.9 billion, which represents 55.7% of the combined value of all digital currencies.
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