In this issue of Coin Metrics’ State of the Network, we unpack key findings from our latest Bitcoin Asset Update, examining demand drivers, network activity, and use-case developments.
Key Takeaways
- Demand for BTC Exposure: Sustained inflows into spot Bitcoin ETFs and the performance of digital asset treasury vehicles such as Strategy highlight investor demand for gaining exposure to Bitcoin (BTC). While this potentially consolidates holdings among few institutions, these products are broadening access for traditional investors.
- Lagging Activity: Despite record prices, Bitcoin blocks are not consistently full. While this allows low-value transactions to be included and broadens accessibility, it also raises concerns about miner profitability, as limited fee generation weakens incentives to sustain network security.
- Growing Use-Cases for BTC: Wrapped BTC products and emerging native Bitcoin applications are creating new opportunities for holders to earn yield and drive network activity. However, transaction fees remain subdued, failing to rise above $150 since August 2024. Over time, fee revenue will need to play a larger role in sustaining miner incentives and network security.
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