ByteTree News, Notes and Updates

    Tracking the Health of the Bitcoin Network with Six Fundamental Indicators

    ByteTree provides essential information for bitcoin investors. A blockchain’s value is determined not by the beauty or complexity of its code or vision, but from the network (or economy) it creates. For example, the price of bitcoin is correlated to many things related to its network, such as Google searches, the number of wallets, or the hash rate. These things will rise with the price because they reflect traction, even if they may be at an arm’s length. On-chain metrics are the most direct and timely way to measure network activity, and the results speak for themselves.

    A trillion dollar network by 2025

    With the bitcoin price dipping below $10,000, it’s a good time to reflect on the longer-term trend. I want to show you the trendline that has been in place since 2011, and a newer one that dates back to 2015. In my opinion, the former has become resistance while the latter has become support.

    Tracking Bitcoin’s Fair Value

    At ByteTree we have derived a fair value for bitcoin based on its utility as a payment network. We compute the market value using on-chain data directly from the Bitcoin Network. Once we have a fair value, we can identify whether bitcoin is trading at a premium or discount versus its exchange traded price.

    The Network Value to Transaction Ratio

    The Network Value to Transaction ratio (NVT) is one of the most important metrics in valuing public blockchain networks. The NVT measures the value of the network relative to its utility as a payment network. The ratio is derived through the following formula;