• CryptoQuant’s Bitcoin Network Activity Index has risen to its highest level since May 2021.
• The uptick in activity is attributed to the increasing popularity of Ordinals NFTs, which are directly stored on the chain using Taproot transactions.
• This has caused an increase in the average block size, which is one of the components of measuring network activity.
Bitcoin Network Activity Reaches Highest Level Since May 2021
On-chain data shows that Bitcoin network activity is now at its highest level since May 2021 as Ordinals NFTs have been rapidly gaining popularity. CryptoQuant’s Bitcoin Network Activity Index has shot up recently as a result of this increased demand for blockchain-based non-fungible tokens (NFTs).
CryptoQuant’s Bitcoin Network Activity Index
CryptoQuant’s “network activity index” evaluates the activity of the Bitcoin network using four metrics: total number of active addresses, number of transactions, unspent transaction output (UTXO) count and block size. The value of this metric has been consistently high in recent days due to the growing popularity of NFTs.
Ordinals NFTs Increasingly Popular
The reason behind this boost in activity is that BTC non-fungible tokens (NFTs) have been quickly becoming popular. These NFTs have become possible on the BTC blockchain thanks to a system called the “Ordinals.” This protocol directly stores images on the chain using Taproot transactions. As these NFTs are directly “inscribed” on the blockchain itself (a fact that has earned them the name “inscriptions”), the Bitcoin block size gets inflated when these are added to transactions.
Block Size Hits New All-Time High
With the rise of NFT transactions on the network, the average block size has observed an increase and has hit new all-time highs. Since the network activity index uses block size as one of its components for measuring activity, it is not surprising that it too has seen a surge as a result.
In conclusion, Bitcoin network activity is currently at its highest level since May 2021 due to increasing demand for Ordinals NFTs and rising block sizes resulting from their storage on chain via Taproot transactions. CryptoQuant’s Bitcoin Network Activity Index reflects this trend with values consistently high over recent days.