Nic Carter, author of cryptocurrency data provider CoinMetrics recently stated that there’s a hidden explanation behind this drop and the final result is good for Bitcoin.
In a progression of tweets, Carter noticed that there was a “positive uptick in batching last week or so.” He saw that Bitcoin transactions are getting greater on average—while the number of transactions has dropped. This, Carter proposes, is an indicator of more batching.
Bitcoin transaction batching is the way toward bringing together a few Bitcoin transfers into one—more complex—transaction, rather than a single BTC movement taking up a block all to itself. Such ‘batching’ reduces the load that Coinbase puts on the Bitcoin’s blockchain by over half.
In the course of the most recent week, Bitcoin price was halved. As indicated by the research from Multicoin Capital, network congestion made the market crash more diligently than it would have done something else.
As Kyle Samani, Managing Partner of Multicoin Capital, clarified, when the price dropped, there was an unexpected increase in Bitcoin transactions. Yet, the system couldn’t process them, prompting delays and higher expenses. This made it harder to move Bitcoin between exchanges, making silos where the Bitcoin price dropped unreasonably, for example, Bitcoin futures exchange BitMEX.
Along these lines, with Coinbase batching its transactions, this opens up more space on the Bitcoin network. In case of another price drop, then at that point the market would be stronger.
