Metric Overview

This metric takes into account the observable positive skewness of USD denominated Bitcoin transaction volumes, whereby the median spent volumes is typically less than the mean. This indicates that smaller size entities generally account for a larger frequency of sent transaction relative to larger entities.

To track this behaviour, oscillators are constructed by taking the ratio between the 7-day MA, and the 365-day MA of median (small entities, 🔵), and mean (large entities, 🔴) transaction volumes.

• When small entities 🔵 exceed large entities 🔴, it typically suggests an influx of small size transactions, and is often associated with the excitement of bull markets and greater speculation.

• When the indicators are increasing, it can be considered to be a signal of higher demand from the relevant entities.

• When the indicators are decreasing, it can be considered to be a signal of lower demand from the relevant entities.

Skewness, in statistics, is the degree of asymmetry observed in a probability distribution. Distributions can exhibit right (positive) skewness, left (negative) skewness, or no skewness (zero).

In the positive skewness case, the Mean > Median.

Considering the historical transactional data for Bitcoin, the mean value of daily transfer volume has typically been larger than the median value. Therefore, the onchain transaction size distribution has positive skewness. This means the number of small volume transactions have a higher frequency.

Therefore, tracking the trend of median transaction volumes can provide a macro framework for assessing the activity level/demand of small size entities.

Coined By

CryptoVizArt (2022)