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The bull market, market mood, speculation, and institutional purchasing have all unwittingly defined Bitcoin’s climb in recent weeks. They are an essential component of the industry that caters to both demand and supply dynamics. However, at its heart, Bitcoin is still viewed and envisioned as a transactional asset, with its protocol and fee distribution shaping its inherent worth.
Now, intrinsic value has been determined from several routes over time, but in this essay, Bitcoin’s worth based on its transactional capabilities is evaluated.
Total Transactional Value, Median Value Transferred hitting lows
Since the last week of May, the total transactional value enabled on the Bitcoin blockchain has been dramatically reduced. On May 24th, BTC was worth $34,000, and the blockchain had completed transactions totalling more than $80 billion. At the time of publication, the value of Bitcoin was still $33,000, but the overall transaction value had dropped to $29 billion.
Similarly, the median transaction value has fallen precipitously. From an average value of $340 at the end of May to $220 at the time of publication.
However, with median transaction value, it is important to factor in the drop of BTC’s value as well, so it is not a like-for-like representation of the actual volume of the transaction value.
Since the beginning of April, the overall fees paid to miners have been decreasing. Recently, Ethereum has dominated the number of fees given to their set of miners, and many speculated that miners were switching sides for the current profitability of mining Ethereum.
The one-week cumulative fee paid to miners has decreased from $94 million during the fourth week of April to a pitiful $13 million at the time of publication. However, one element that must be addressed is the charge as a proportion of the transaction amount.
A Fair-Value discrepancy?
Finally, when the fair value of Bitcoin is calculated by comparing current network activity to the current price, the fair value is $17,067 at the time of publication. The last time fair value fell to this low was on December 18th, 2020. Before assuming a bearish predominance, there are a few factors to consider. Only a few times in the last year has the fair value of Bitcoin surpassed the actual price of Bitcoin.
The fair value was greater on the 15th of January, the 26th-29th of February, and between the 20th and 26th of May.
If Bitcoin values were only determined by network use, this would have been a big red flag. However, as stated in the opening paragraph, other variables continue to have a significant impact on the price of Bitcoin. Whatever its reasonable market worth may be.