On-chain analysis of the Bitcoin network shows bullish signs.
Bitcoin halving has passed and now investors and experts from the crypto world are waiting to see what the market will feel like. The digital currency before halving ended up appreciating and embarked on a steady bullish run. To gain an in-depth understanding of how Bitcoin is doing after this event, its metrics and on-chain analysis come into play.
On-chain analysis is used to leverage data on the blockchain network in relation to the views, ideas and composition of users of a specific digital currency. They can also provide actionable information to investors about the technical and fundamental strength of currencies.
Some of the popular on-chain analytics used by cryptocurrency analysts and investors includes the NVT ratio (Network Value to Transactions Ratio). The NVT indicator shows the value of the Bitcoin network in proportion to the transaction and is calculated by dividing Bitcoin’s market capitalization by the daily on-chain volume.
Santiment, a blockchain data and analytics company, on May 21 revealed that NVT remains “healthy”. Santiment also showed that the number of unique tokens being traded on the network registered an increase in numbers compared to last month, indicating an imminent race.
An update from Arcane Research in the Bitcoin market after halving showed that there is a growing demand for digital currency on the BTC network. The update revealed that the Bitcoin network got stronger after the event and is poised for a persistent long-term trend.
BTC’s network demand score reached a perfect score of 6/6, 14 days after the event, as the on-chain demand for digital currency increased. The metric highlighted the rates, value and volume of the transaction, as well as the mining company’s ongoing inventory.
Phillip Swift, an independent on-chain data analyst also said earlier this year that NVT has increased in recent weeks, despite the slight drop in BTC prices recently. Swift explained that the indicator dubbed by experts as “Bitcoin price / earnings ratio”, after considering performance on the Bitcoin network, is signaling a high race for the digital currency.
Although the Bitcoin Network Demand score saw a slight decline, it remained above 3/6 for a few weeks, a strong sign of growth in the Bitcoin network, regardless of recent price volatility. Its underlying strength signals upward momentum.