SegWit and Taproor adoption numbers
Segregated Witness (SegWit) adoption is very high. This soft fork changed the transaction format of Bitcoin, which speeds up transaction times and lowers fees. In order to realize this improvement, products, and users of the Bitcoin network have to adopt and utilize this change.
Glassnode shows adoption is near 89%, and utilization of SegWit is now over 80%. These are impressive numbers, given how complex the process of software upgrades, combined with user adoption, can be.
Compare these stats with Taproot adoption, intended to increase privacy and lower transaction fees. Glassnode reports approximately 22% adoption of Taproot and just over 11% utilization.
It is important to point out that SegWit has been around for more than double the amount of time than Taproot, but the differences in adoption are still interesting.
Lightning Network growth numbers
Next, we can look at the Lightning Network. During the bear market, there has been a material drop in the number of public nodes on the network.
The number of nodes peaked at more than 20,000 at the top of the bull market and today sits under 13,000 nodes. This is not surprising, but seeing this approximately 40% drop in public nodes is noteworthy.
As we have seen nodes drop, we have also seen public channels drop. The peak was just under 90,000 channels; today, Glassnode reports less than 60,000.
Bear markets are brutal, and many people decide to move on to other things. One point to call out is that these data points around nodes and channels should only be used for directional analysis because the data doesn’t include non-public nodes or nodes Glassnode that has no connectivity.
Bitcoin supply is not moving
Another data point I have watched over the last few weeks is “Supply Last Active 2+ Years Ago.” This essentially measures the percent of bitcoin in circulation that have not moved in the last two years. We hit a new all-time high of 53% last night, which means that more than 1 out of every 2 bitcoin in circulation has not moved in two years.
This is mind-boggling to think about. Few financial assets, especially those worth hundreds of billions of dollars in market cap, have this level of illiquidity. You could argue that this single metric proves Bitcoin’s role as digital gold.
Critics won’t agree, but the data is becoming difficult to argue against.
If you take this analysis further, you see that almost 29% of all bitcoin in circulation has not moved in the last 5 years. That is more than $150 billion in market cap that hasn’t moved in a half-decade.
If you zoom out, just under 15% of all Bitcoin in circulation has not moved in over a decade. That is more than 2.7 million bitcoin that have either been lost, forgotten, or reside in the hands of the most disciplined investors in the world.
Lastly, we have seen bitcoin on exchanges continue to fall significantly since March 2020. This continued drop in Bitcoin on centralized exchanges has been driven by various issues with different companies, including bankruptcies and fraud.
Bear markets tell a different story than bull markets, but it appears that the network continues to have a number of trends providing a tailwind for what has been the best-performing asset since inception.”