Every bitcoin transaction must be added to the blockchain, the official public ledger of all bitcoin transactions, in order to be considered successfully completed or valid. The work of validating transactions and adding them to the blockchain is done by miners, powerful computers that make up and connect to the network. Miners have a financial incentive to prioritize the validation of transactions that include a higher fee. For someone looking to send funds and get a quick confirmation, the appropriate fee to include can vary greatly, depending on a number of factors. While the fee does not depend on the amount you’re sending, it does depend on network conditions at the time and the data size of your transaction. On the graph above, the fluctuations of the average transaction fee are depicted. The current fee size for 18th April is 0,475.

Realized Value to Transaction Volume Ratio

RVT Ratio was first created in-house, undisclosed, inside Adaptive Fund by David Puell, but later created in parallel by Checkmate and publicly presented. RVT is short for “Realised Value to Transaction Volume ratio” and as such is a derivative of MVRV Ratio. Where MVRV is a ratio of the market cap to realized cap (that is the total value the market paid for their coins), RVT uses transaction volume. Since transaction volume tracks market cap to a very high correlation the results a similar. RVT creates a useful signal for macro market tops and bottoms and also can be used to locate what phase the market is in between these two transition points. On-chain volume estimates provided by Coin Metrics. By April 2020, RVT is 0, 0148.

Monetary properties

Bitcoin 60-day Volatility — 19.38%

Red — BTC/USD Volatility, Blue — USD/EUR Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index over a given period of time. Generally, this measure is calculated by determining the average deviation from the average price of a financial instrument in a given time period. We use standard deviation whose using is the most common, but not the only, way to calculate historical volatility. The higher the historical volatility value, the riskier the asset (in our case, Bitcoin). However, that is not necessarily a bad result as risk works both ways — bullish and bearish. But there is an important point for long-term crypto-investors — Bitcoin volatility is decreasing, however, USD/EUR volatility does not change accordingly.

Bitcoin Inflation — 3.9%

Talking about Bitcoin Inflation Rate, we do not mean the purchasing power of money, but the average mined Bitcoins. There is a fixed amount of 21 million Bitcoin that can be minted, which implies that no coins can be produced once this point is reached. Approximately 80 percent of the total amount of Bitcoin has already been minted. Bitcoin’s algorithmic inflation rate since 2010 is displayed in the figure above and is explained in the original Bitcoin white paper. On July 9, 2010, Satoshi wrote: “When someone tries to buy all the world’s supply of a scarce asset, the more they buy the higher the price goes.”

In 2011, BTC’s inflation rate was between 30–50% and between 2011 and 2014 it dropped to 12%. After the halving in 2016, when the block reward was cut from 25 BTC to 12.5 BTC, the inflation rate kicked down to 5–4%. Today, throughout the month of February 2020, the BTC network’s inflation rate is between 3.59% and 3.86%.

Inflation Rate Over The Period

The difficulty re-adjustment makes it impossible to simply mine more Bitcoin by allocating more computer resources to the network. As more people try to mine Bitcoin, the software automatically increases the difficulty of successfully mining a Bitcoin and vice-a-versa.

Once the inflation rate reaches zero, miners will no longer be able to earn money from minting newly created bitcoins. Instead, transaction fees will have to increase or the number of transactions will have to increase.

As we’ve already mentioned Bitcoin Block Reward Halving Date approaches. According to the history prices and previous halving, we believe that after this date Bitcoin’s price will incredibly rise because the inflation rate will drop by half.

First created by Twitter user @icoexplorer, VWAP stands for volume-weighted average price. In effect, VWAP is an alternative method to Realised Price in determining the average price the market paid for their coins. VWAP to Price ratio is therefore similar to MVRV Ratio and can be used to find market tops and bottoms. The shorter range VWAP Ratios for example over 7 or 90 days can be used to signal ideal top and bottom points for swing trading while the global VWAP signals the macrocycle top and bottoms.

When calculating VWAP, the standard method uses the commodity unit (i.e. BTC) for volume weighting, this chart deviates by using USD units. For Bitcoin due to its exponential rise in price, the two methods create different charts. These differences are small in shorter time cycles, but on longer time cycles the USD method has the effect of putting greater emphasis on more recent historical activity.

Source: Data for macro markets is from the US Federal Reserve. Bitcoin price data is from Blockchain.com

Risk-adjusted returns are defined as ROI/Risk. Where risk is calculated as the changeability (volatility) of ROI. This is officially known as the Sharpe Ratio. In this chart it is used, a 4 year HODL period to run the Sharpe Ratio calculation, this seems a sensible choice as it is sufficient time to cover a full bear to bull cycle.

Bitcoin Future on the Chicago Mercantile Exchange

The CME was created in 1898 as a commodities exchange for butter and eggs. It is now one of the biggest financial exchanges in the world, specializing in futures and options across industries, from agriculture to metals to real estate. The CME launched Bitcoin futures trading in December 2017, and volume on the exchange has been rising since then.

On May 13, 2019, the Chicago Mercantile Exchange (CME) reported a daily volume of over $1.3 billion in notional value for Bitcoin futures contracts traded. The CME is a regulated exchange based in the United States, but unregulated exchanges outside of the U.S. report even higher volumes for futures trading. On the same day, BitMEX reported $13 billion in notional value traded. However, on May 28, 2019, the volume raised 21 thousand futures. On 18th June 2019, it was only 8 thousand futures. The current point is 2,175.

Above is the line break chart of Bitcoin’s average daily computing power representing substantial fluctuations. For example, the hash rate 101.23 EH/s on September 16, 2019, dropped to 88.96 EH/s on September 17, 2019 — a decline of 12 percent. Increases or decreases of about 10 percent are very common. The reason for such a phenomenon is pretty explainable? As we mentioned above, the hash rate is the sum of all computing power. It does not necessarily mean that thousands of mining machines are switching on and off every day. In fact, the hash rate cannot be accurately counted. The data depicted by the chart above is not the actual computing power, but an estimate based on the difficulty and the time of block confirmation. Mining difficulty and computing power, together with luck, will affect this time. The luck of the whole network fluctuates greatly on a 24-hour scale, so the average daily computing power on a single day does not have much reference value. We must take a dimensional view of the computing power to reduce the deviation brought on by this luck. That is to say, the average seven-day computing power may have exceeded 100 EH/s, but the average daily computing power has not yet broken it.

For Bitcoin or all PoW-based cryptocurrencies, security does not depend on the hash rate but on the cost of 51 percent attacks. The higher the attack cost, the safer the network will be. The current increase in Bitcoin’s hash rate means that the requirements for 51 percent attacks on the network are correspondingly extended, but this does not mean that the cost of 51 percent attacks has grown as the unit cost of computing power should be taken into consideration.

Furthermore, there is no direct relationship between the Bitcoin hash rate and bitcoin’s price. Hash rate by no means determines the price. On the contrary, the price will more likely affect the hash rate. With the rise of the price, the miners’ profits are liable to grow, which consequently attracts more miners to join the network, thus increasing the cumulative hash rate.