BTC Analysis September 2023

To prepare the Bitcoin analysis, the openly accessible on-chain data was researched.

In this BTC on-chain analysis we took into consideration the following metrics: daily active BTC addresses, number of Bitcoin transactions, BTC balances on exchanges, Bitcoin hash rate. And, for the first time, we added the MVRV (Market Value Realized Value) Z-Score as a metric as well.

Look out for updates as we post new BTC on-chain analysis every one-two months.

Daily Active BTC Addresses

There has been a decline in the number of newly created BTC addresses during September, and this has increased to over 32% in the last seven days. At the same time, the number of active addresses and zero-balance addresses remain stable, with a slight increase of less than two per cent over the last week.

• The decrease in the number of new addresses in September may indicate a decline in new users' interest in BTC.

  This could be due to the overall low activity in the crypto market amid the prolonged consolidation of the BTC value.

• The fact that the decrease in the number of newly created Bitcoin addresses increased to more than 32% over the last week may indicate that this trend is intensifying.

  This could be a warning of a possible further decline in interest in BTC.

• Despite the decline in new user interest, the number of active addresses remains stable.

  This may indicate that current BTC holders are still actively interacting with the Bitcoin network and not leaving it.

• An increase in zero-balance addresses by less than two per cent may indicate some increase in new users.

  Or that current participants have resumed active use of their BTC addresses.

In general, a decrease in the number of new addresses requires attention, as it may indicate a change in interest in BTC. A stable number of active addresses indicates that current users remain active, while a slight increase in zero-balance addresses may indicate some activation in the crypto market. 

Number of Bitcoin Transactions

Also in September, there was a decrease in the number of BTC transactions from 703.69K to 285.75K txs.

The decrease in the number of transactions in September, from 703.69K to 285.75K transactions (txs), confirms the trend of reduced activity in the Bitcoin network during this period. 

The decrease in the number of transactions is due to a decrease in users' interest in making financial transactions with BTC. 

This may be due to a prolonged consolidation after a sharp decline in the value of the asset. Investors can expect news, events or factors that may affect the direction of Bitcoin price in the future.

BTC Balances on Exchanges

The amount of BTC on centralized exchanges continues to decrease gradually.

Investors may reduce their balance on exchanges for strategic reasons, such as engaging in long-term investing(HODLing) or waiting for certain crypto market conditions that they consider more suitable for selling an asset.

Also, a reduction in the Bitcoin balance on exchanges may also be an indicator of reduced trading activity. 

Bitcoin Hash Rate

The Bitcoin hash rate continues to grow steadily with no hint of slowdown despite the long consolidation of the BTC price after a drop to the $26,000 area.

The hashrate growth may indicate that miners are still interested in mining BTC, even at the current price. This can be interpreted as a positive signal that indicates miners' faith in future growth of the price of Bitcoin.

An increase in hash rate also means an increase in the processing power of the Bitcoin network, which makes the network more secure against potential attacks. This can be an important aspect for users and investors interested in network security.

Overall, the rise in Bitcoin's hash rate during a long price consolidation could represent an interesting dynamic in the market. It may indicate the persistence of miners and their confidence in the future of BTC.

Bitcoin Analysis: MVRV Z-Score

The MVRV (Market Value Realized Value) Z-Score is a blockchain analysis tool designed to identify when Bitcoin is significantly over or undervalued relative to its 'fair value.' This is the first time we looked into this piece of on-chain data to analyse the Bitcoin movements.

MVRV Z-score evaluates Bitcoin market value against its realized value to provide insights into crypto market conditions.

To calculate the MVRV Z-Score, the market value is determined by multiplying Bitcoin's current price by the total number of coins mined. In contrast, the realized value takes into account the BTC price at which each coin last moved, factoring in lost or long-held coins.

The MVRV Z-score ratio is derived by dividing the market value by the realized value. A ratio above 3.7 indicates overvaluation, while a ratio below 1 suggests undervaluation.

Keeping the realized value of BTC near the green zone, which has historically been considered a good time to buy, may indicate that the asset is considered undervalued.

The undervaluation of Bitcoin may attract investors who are looking to buy at a lower price with the hope of future growth.

Users can get BTC for fiat or crypto on SimpleSwap.

Summary

Analysis of Bitcoin on-chain data reveals several interesting observations about the current state of the crypto market and the crypto's prospects:

The number of new BTC addresses dropped in September indicating declining interest from new users amid low market activity, although active addresses remained stable.

BTC transactions decreased significantly from 703K to 285K in September, confirming lowered network usage and transactional interest during the Bitcoin price consolidation. 

BTC balances on exchanges kept decreasing potentially due to investors holding strategically or waiting for favorable conditions to sell, also signaling reduced trading volumes.

Despite sideways BTC price, the Bitcoin hash rate grew steadily in September suggesting miners remain confident mining BTC even at current prices.

BTC's realized value stayed near the buy zone implying possible undervaluation that could attract investors expecting future growth.

In this article we also introduced MVRV Z-score as a metric. Z-score showed an alleged undervalue of Bitcoin.

Overall, the on-chain data points to the relative stability of the Bitcoin network after temporary fluctuations and supports long-term confidence in the prospects of this cryptocurrency. 

The decline in new addresses needs attention, but the stability of active addresses and other factors indicate that current users remain active. At the same time, the growth of BTC hash rate and the undervaluation of the asset add positive aspects for investors.