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Tuesday, June 25, 2024

Over 75% of Daily Bitcoin On-Chain Transactions Used Taproot: Data

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Bitcoin’s price may have steadied under $30,000, but the network is seeing a significant spike in activity owing to the Taproot upgrade.

It is important to note that the Taproot upgrade paved the way to create decentralized apps (dApps) on the Bitcoin blockchain by improving the privacy, scalability, and security of the network. The introduction of new signature schemes and a flexible transaction structure improved the Bitcoin blockchain’s long-term viability to support the development of DeFi.

Taproot Behind Bitcoin’s Heavy Activity

Glassnode data suggest more than 75% of Bitcoin on-chain transactions used Taproot on May 7. This is a record high when compared to only 1.536% at the beginning of the year.

Bitcoin Transactions via Taproot. Source: Glassnode

The surge in Taproot’s adoption prompted the rise in network traffic. In fact, the transaction counts increased more than 2x compared to the 2022 baseline, according to Glassnode co-founder Rafael Schultze.

The exec revealed that this figure had remained in a stable range of around 250k transactions per day throughout last year. The previous ATH of 490k daily transactions dates back to the 2017 bull market.

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The network activity pushed the average fee rate to the highest in nearly two years which, in turn, showered Bitcoin miners with extra revenue. The average fee per Bitcoin transaction rose to $19.2 on May 7th, the highest since April 2021, according to BitInfoCharts’ data.

Bullish Despite Heightened Volatility

Meanwhile, there are currently over 455,000 transactions waiting to be confirmed in Bitcoin’s mempool. While the network congestion can be attributed to the rise in Ordinals inscriptions, this, nevertheless, ignited concerns over a potential Denial of Service (DoS) attack on the network.

Binance, for one, was forced to halt BTC withdrawals citing “the large volume of pending transactions.” Amid the volatility and FUD, Bitcoin investors appear to be bullish.

The number of addresses sending BTC to exchanges hit a 2-year low of over 3,700, potentially indicating that investors are willing to hold the asset in anticipation of a new rally.

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