Bitcoin Transactions Experience Sharp Drop After All-Time High
After reaching a record high in daily transactions in September, the number of transactions on the Bitcoin network has seen a significant decline, dropping to levels not seen since the hype surrounding Ordinals began. Ordinals, introduced by Casey Rodarmor earlier this year, allow for the indexing and tracking of every satoshi on the network. This process, known as “inscription,” assigns image or other data to individual satoshis.
This protocol had a notable impact on Bitcoin activity earlier in the year, leading to a surge in transaction volume. From May to mid-September, the average weekly transaction count ranged between 400,000 and 500,000, peaking at 600,000 on September 20.
However, by October 9, the average weekly transaction volume had sharply dropped to around 283,000, reaching a level not seen since the end of February. This decline appears to be related to a decrease in Ordinals inscription activity.
Correlation Between Ordinals Inscriptions and Bitcoin Transactions
Analyst Rebecca Stevens from The Block Research has observed a clear correlation between Ordinals inscriptions and Bitcoin transactions. Users need to initiate a transaction to link metadata to a satoshi. The drop in transactions is likely due to a decline in Ordinals inscription activity, according to data aggregated on Dune.
Introduction of Runes
The creator of the Ordinals protocol has introduced an improved version called Runes, which aims to replace BRC-20. Runes is characterized by a smaller on-chain footprint. This development may have caused concerns among users that Runes could entirely replace BRC-20, potentially contributing to the decline in activity.
“It’s not exactly clear why the sudden fall happened, but the creator of the Ordinals protocol did come up with a new protocol to replace BRC-20 called Runes, which are designed to have a smaller on-chain footprint,” said Stevens.
Furthermore, concerns have arisen regarding inconsistent inscription numbers, leading to calls for re-indexing Ordinals. These concerns may have impacted the confidence of users in the inscription process and their willingness to engage in it.
Hot Take: Decline in Bitcoin Transactions Raises Questions about Ordinals and Runes
The recent sharp drop in Bitcoin transactions has raised questions about the impact of Ordinals and the introduction of Runes. While Ordinals initially led to increased transaction activity, the decline in inscription activity seems to have affected overall transaction volume. The introduction of Runes as a replacement for BRC-20 has also created uncertainty among users and may have contributed to the decrease in activity. It remains to be seen how these developments will shape the future of Bitcoin transactions and the adoption of new protocols.
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