Glassnode Unveils ‘Game Changer’ New Tool for Reading the Crypto Market. The new economic framework that Glassnode has developed will make it simpler to account for the lost coins’ effect on the Bitcoin market.
The methodology, which will assist in boosting the accuracy of on-chain analysis and is named “Cointime Economics (CE),” is something that knowledgeable investors and traders frequently use to read where the price of Bitcoin is heading.
What is Cointime Economics?
According to James Check, the chief analyst for Glassnode, CE moves away from analysis focused on Bitcoin’s unspent transaction outputs (UTXOs). This analysis “zeroes in on individual transaction outputs and requires extensive datasets.”
On the other hand, the framework uses a brand-new unit of time measurement called “Coin blocks,” formed whenever a new Bitcoin block is added to the network. A certain amount increases these Coinblocks at predetermined periods. The Coinblocks contained within the Bitcoin UTXOs are obliterated if those UTXOs are spent.
Glassnode Unveils ‘Game Changer’
At a macro scale. The aggregate state of the network is defined by Liveliness and Vaultedness, which describe the relative activity and inactivity of the supply. Respectively,” said Check in a blog post on the subject. “At a micro scale, the aggregate state of the network is defined by Liveliness and Vaultedness.”
Ark’s report on the matter describes Coinblocks as “coin volume times blocks held.” As a formula, Ark’s independent report on the subject describes Coinblocks as “coin volume times blocks held.”
‘Game Changer’ New Tool for Reading
The measurement separates Bitcoin’s supply into the “Active” and the “Vaulted” collections, which refers to the inactive pools. These become the new reference points for various economic computations, such as “inflation rates, vaulting rates, and stock-to-flow ratios.”
As an illustration, ARK states that the “inflation rate” of Bitcoin is typically computed “by dividing annualized issuance by total outstanding supply. This is only one illustration. When CE is introduced, however. The ratio of active collection to sealed supply is factored into the inflation rate calculation. Specifically, this is accomplished by adding the ratio in question to the value used for inflation before.
The nominal inflation rate for Bitcoin as of the 7th of May, 2023, was 1.64%. At the same time, the coin time-adjusted inflation rate was 2.48%.
What is Cointime Good For?
CEO provides a key benefit over earlier analysis methods by exaggerating the economic impacts of “truly active supply. At the same time, minimizing the influence of long vaulted collection. Which presumably includes lost coins. This allows CE to provide a fundamental edge over earlier methods of analysis.
An explanation of how Satoshi’s long-lost Bitcoin stash has long impacted measures for commonly used metrics such as realized price was provided by Check in an email sent to CryptoPotato.