Last week, NYDIG analysts released a report providing key insights into transaction volumes on the Bitcoin network for the final year of 2021. The report shows that throughout 2021, the total volume of transactions on the Bitcoin network was much higher than some of the well-known credit card networks like American Express.
The report shows that in 2021, the Bitcoin blockchain processed $ 3.0 trillion in total transactions. That was double American Express's 1,3 trillion. However, major payment giants like Visa and Mastercard continue to dominate the payments industry. The report written by research analysts Greg Cipolaro and Ethan Kochav notes:
“This is surprising growth, in our opinion, for a payment network that just turned 13. Major card networks have decades of history - Visa was launched in 1958, Mastercard in 1966, American Express issued its first card in 1958, and Discover in 1985 ”.
The study shows that analysts only considered the dollar value of transactions rather than the actual number of transactions. Hence, there is a greater likelihood that most BTC transactions were simply tied to users buying, trading and selling their BTC instead of using it to pay for something.
The growth in the volume of Bitcoin transactions
The research notes that Bitcoin has seen a significant jump in transaction volume. However, this has not been linear growth for the largest cryptocurrency in the world. The researchers wrote:
“Bitcoin has maintained a torrid pace when looking at the 5-year compounded annual growth rates. At the end of 2021, the volume of transactions has grown by almost 100% per year over the past 5 years ”.
Researchers noted that rather than seeing Bitcoin as digital gold every time, think of it as a payment system first. "As a payment system, Bitcoin is arguably bigger and growing faster than most might realize," they wrote.
The researchers note that the Federal Reserve's stance on quantitative tightening has recently impacted risk assets. America has currently witnessed high inflation for three decades and the Fed is looking to raise rates and reduce bond purchases.
This has put a lot of pressure on the stock and cryptocurrency markets. As we have seen, the cryptocurrency market has undergone a sharp correction since the beginning of 2022. The researchers add:
“Wednesday's Federal Reserve FOMC meeting was once again an event that caused prices for bitcoin and other risk assets to move. Risk assets had sold out prior to the meeting, leading us to write earlier this week that we could have had a relief rally if the Fed's stance was within expectations. ”
Bitcoin as an ecosystem continues to expand. There is certainly more retail and institutional participation in Bitcoin than ever before.