Definition. This chart tracks the momentum of network adoption by comparing the monthly average 🔴 of new entities against the yearly average 🟢, plotted over the raw daily new entity count (faint orange) and price (grey). Healthy network adoption is often characterized by an uptick in daily active users, more transaction throughput, and increased demand for blockspace (and vice-versa); counting new entities utilizes our entity-adjustment methods to more accurately gauge the magnitude, trend and momentum of activity across the network than raw address counts.

Technical. The two momentum traces are simple moving averages of the daily count of new entities:

• Monthly Average = sma(New Entities, 30) 🔴
• Yearly Average = sma(New Entities, 365) 🟢

Periods where the monthly average trades above the yearly average are additionally shaded with a faint yellow background band.

Interpretation. Due to intraday volatility in on-chain activity metrics, the absolute value of new entities on any given day can be uninformative. However, comparing the magnitude and trend of new entities entering the market on a monthly and yearly basis can be much more informative — the crossovers underline relative shifts in dominant sentiment and help identify when the tides are turning for network activity:

• Monthly 🔴 > Yearly 🟢 indicates an expansion in on-chain activity, typical of improving network fundamentals, and growing network utilization.

• Monthly 🔴 < Yearly 🟢 indicates a contraction in on-chain activity, typical of deteriorating network fundamentals, and declining network utilization.

Notes. This momentum framework was first featured by Glassnode in The Week On-chain newsletter (Week 34, 2022 and Week 43, 2022). Built from Number of New Entities. The same framework applied to address-based activity is charted in New Address Momentum and Active Address Momentum.