Glassnode Unveils ‘Game Changer’ New Tool for Reading the Crypto Market

Glassnode has released a groundbreaking new tool that promises to revolutionize the way investors read the crypto market. This innovative tool, introduced by Glassnode, a leading provider of on-chain analytics for cryptocurrencies, aims to provide investors with crucial insights and data for making informed trading decisions. With this “game changer” tool, investors can now gain a comprehensive understanding of market trends, investor behavior, and key indicators, resulting in a more accurate assessment of the crypto market. Whether you are a seasoned investor or a beginner, Glassnode’s new tool is set to become an invaluable asset in navigating the volatile world of crypto trading.

On-chain analysts at Glassnode and Ark have developed a revolutionary framework called “Cointime Economics (CE)” for analyzing the economic state of the Bitcoin network. This new framework aims to enhance the accuracy of on-chain analysis, which is widely used by investors and traders to forecast Bitcoin’s price movements.

What is Cointime Economics?

According to James Check, the lead Glassnode analyst, CE differentiates itself from traditional analysis approaches based on Bitcoin’s unspent transaction outputs (UTXOs). This traditional approach requires extensive datasets and focuses on individual transaction outputs. In contrast, CE introduces a new unit of time measurement called “Coinblocks,” which are generated each time a new Bitcoin block is added to the network. When Bitcoin UTXOs are spent, the Coinblocks within them are destroyed.

In a separate report by Ark, Coinblocks are defined as “coin volume times blocks held.” This innovative formula provides a more comprehensive understanding of the network’s state. Check describes Liveliness and Vaultedness as key indicators to analyze the aggregate state of the Bitcoin network. Liveliness refers to the relative activity of the supply, while Vaultedness indicates the inactivity or “vaulted” supply. These metrics serve as reference points for analyzing inflation rates, vaulting rates, and stock-to-flow ratios.

For example, the inflation rate of Bitcoin is commonly calculated by dividing annualized issuance by the total outstanding supply. However, CE incorporates additional factors by considering the ratio of active supply to vaulted supply, therefore providing a more accurate inflation rate measurement. As of May 7, 2023, the nominal Bitcoin inflation rate stood at 1.64%, while the cointime-adjusted inflation rate was 2.48%.

What is Cointime Good For?

CE offers a significant advantage over previous analysis methods by emphasizing the economic impact of truly active supply while minimizing the influence of long vaulted supply, which likely includes lost coins. Check points out that Satoshi’s long-lost Bitcoin stash has distorted several widely-used metrics, such as realized price. Realized price calculates the average coin price based on the last transaction of each coin on the network. CE allows analysts to account for lost coins using simple mathematics without needing to identify which coins are lost.

In conclusion, Cointime Economics (CE) is a groundbreaking framework for analyzing the economic state of the Bitcoin network. By introducing the concept of Coinblocks and focusing on Liveliness and Vaultedness, it provides more accurate insights into inflation rates and other economic calculations. Additionally, CE addresses the impact of lost coins, bringing enhanced accuracy to on-chain analysis.

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