In 2023, Bitcoin has had a stunning comeback, with daily transaction volumes approaching all-time highs. Analysts must ascertain how much inscriptions are driving this expansion in comparison to monetary transfers because the rise of inscriptions has played a significant influence in this development.
This year has seen a substantial change in the Bitcoin mempool, including a dramatic increase in fee pressure during the FTX crisis and ongoing cost pressure throughout 2023. Three waves of inscriptions, which occurred as individuals scrambled to register before the one million threshold, correlate to these plateaus.
Preferences for inscription have changed throughout time as well. Until recently, image inscriptions dominated the market, but text-based ones have now taken control. More than 2.39 million inscriptions totaling 9.3 GB of data and 212 BTC in fees have been added to the Bitcoin ledger as of this writing.
Currently, inscriptions account for 30–40% of mined transactions and 10–20% of fees paid. The bulk of surviving transactions are financial and are frequently carried out through exchanges.
On Bitcoin, a number of techniques may be used to filter transfer volume, including raw unfiltered, change-adjusted, and entity-adjusted. Volumes remain far below the 2021 bull market high across all three categories, but are more akin to peak levels from 2017.
With little investment from investors who purchased at the FTX lows, the long-term holding supply of Bitcoin is steadily rising to new all-time highs. These BTC HODLers continue to be in charge, but on-chain activity is still insignificant and predominately made up of inscriptions.
The ecosystem of Bitcoin is now seeing increased activity in a number of areas, including transaction volume, address activity, inscriptions, and mempool congestion. Furthermore, the level of HODLing and the supply acquired below $30,000 demonstrate investors’ strong conviction.
