Analytical firm Glassnode and Ark Invest, focusing on the leading cryptocurrency, Bitcoin (BTC), have revealed critical data. What does this metric mean that is said to closely affect the price movement of the cryptocurrency?
A New Metric in Bitcoin!
On-chain measurements play a crucial role in understanding the dynamics of the Bitcoin network and market sensitivity. According to David Puell, a research partner at ARK Invest, and James Check, the chief analyst at Glassnode, this new metric has come to the forefront with the claim of being called “Cointime Economics.”
Furthermore, Puell, the creator of the well-known Puell Multiple, is not new to introducing metrics. On the other hand, Check is also known for his contributions to metric development on the Glassnode platform. So, what exactly is Cointime Economics? According to the joint research article, Cointime Economics will act as a feasible measurement of Bitcoin’s supply and demand. Check and Puell emphasized the need to consider certain existing metrics when evaluating the metric.
These measurements include Market Value to Realized Value (MVRV) ratio, Bitcoin inflation rate, and volume-weighted cost. Based on the information in the report, a combination of metrics will help determine the valuation, efficiency, and economic situation of Bitcoin. This, in turn, leads to the introduction of cryptocurrency blocks. The article explains the term as follows:
“Coinblocks are the product of the number of Bitcoins and the number of blocks produced during the period in which this Bitcoin remained inactive.”
To evaluate Bitcoin’s economy, value, or network activity, created Coinblocks (CBC), destroyed Coinblocks (CBD), and stored Coinblocks (CBS) will play different roles. CBD measures the time-weighted circulation of Bitcoin volume or the number of Bitcoins moved during a specific period, the holding period, or the time held before being moved.
Possible Impact on Cryptocurrencies!
On the other hand, stored Coinblocks (CBS) represent the difference between the total number of coinblocks created and the total number of coinblocks destroyed. When CBS is negative for a seven-day period, it means that the number of destroyed coin blocks exceeds the number of created blocks. This indicates a significant number of old coins moving rapidly.
When CBS is positive, it means that the number of created cryptocurrency blocks exceeds the number of destroyed blocks. In this case, it signifies that fewer old cryptocurrencies have moved in a short period. Finally, Created Coinblocks (CBC) represent the total time of cryptocurrency creation in the Bitcoin network, independent of cryptocurrency movement. Glassnode and Ark Invest evaluated what happened when CBD surpassed CBS in 2017 by combining all parameters.
