The measurement of ‘transactional volume’ in a Cointime Economics framework is best captured by the coinblocks destroyed metric, representing the spent cointime volume at each blockheight. From this we can calculate from cointime-derived network valuation to network throughput ratios. These are analogous to the traditional NVT and RVT ratios, widely popular in the on-chain analysis field.

Here we consider the following framework for establishing Cointime NVT and RVT Ratios:

• 🔴 The Cointime Network-Value-to-Transactions (NVT) Ratio is calculated as the market value of the Active Supply (Active Cap) divided by the 90-day moving average of coinblock value destroyed.

Cointime NVT = (Price * Active Supply) / (Price * CBD)_{90DMA})

• 🟢 The Cointime Realized-Value-to-Transactions (RVT) Ratio is calculated as as the cointime realized value of the Active Supply divided by the 90-day moving average of coinblock value destroyed.

Cointime RVT = (Cointime Price * Active Supply) / (Price * CBD)_{90DMA}

Cointime NVT and Cointime RVT Ratios have both shown a remarkable degree of stability over time, and can be considered within the following framework:

• High Values indicate that the valuation of the Bitcoin network is large relative to the degree of coinblock value destruction that is taking place.

• Low Values indicate that the valuation of the Bitcoin network is small relative to the degree of coinblock value destruction that is taking place.

Coined By

This metric was developed within the Cointime Economics framework for Bitcoin. This project was a joint venture between Glassnode and ARK Invest, with full details available in two formats: an overview primer (Version I published via ARK) and a comprehensive guide for specialists (Version II published via Glassnode).