Analysts Introduce Innovative Framework to Decode Bitcoin Economy in Bear Market
Investment firm Ark Invest and blockchain security firm Glassnode have revealed a conceptual framework for understanding the Bitcoin (BTC) economy amid the ongoing bear market.
On Thursday, Ark Invest unveiled the whitepaper, titled "Cointime Economics: A New Framework For Bitcoin On-chain Analysis," which aims to provide a toolkit for comprehending the economic realities of Bitcoin in a new way.
The paper is co-authored by David Puell, a research associate for ARK Invest, and James Check, the lead analyst for Glassnode
It focuses on the differences between the current unspent transaction (UTXO) and a new model called "cointime" that assesses the "real economic weight of a Bitcoin."
The cointime economics approach considers the importance of a Bitcoin based on the last time it was moved.
It introduces the concept of a "coinblock," which multiplies the number of Bitcoin by the number of blocks produced while the Bitcoin remains unmoved.
For example, if 10 coins are held during the time taken to produce 10 blocks, this represents 100 coinblocks.
The whitepaper suggests that heavy coinblock destruction indicates that long-term holders are selling their Bitcoin.
These "smart money" investors typically possess larger Bitcoin balances, trade from lower cost bases, and generate higher profits.
Additionally, the document introduces two new metrics for analyzing Bitcoin's economic state.
This includes "liveliness," which measures the activity level of the network, indicating how often coins are moved or destroyed, and "vaultedness," which refers to the number of coins that are stored and signifies how inactive the protocol is.
The authors claimed that the cointime framework provides a consistent and mathematical approach to measuring
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