Bitcoin's price has surged in recent weeks, driving past the $29,000 mark. Behind the scenes, however, the mean transaction size, based on the 7-day moving average, is at its lowest level in three years. The mean transaction size is an indicator of activity, as it relays the average size of transactions over a given period. Seeing as Bitcoin blocks are limited to a capacity of 1 MB, the number of transactions that can fit in a block will depend on their size; typically, they range between 300 and 400 bytes.

A sharp expansion of the mean transaction size was observed in January 2023 following the launch of Bitcoin Ordinals, a platform that enables users to store files - like texts, images, and videos - in Bitcoin blocks. This was initially attributed to a high number of images being attached to Satoshis as opposed to text inscriptions. However, as time has gone by, a shift has occurred towards more text inscriptions, which are much smaller in size than images. As a result, this could be seen as the cause of the drop in mean transaction size from late March to early April.

Notably, the decrease was further amplified in early May when the mean transaction size fell to 467.949 - the lowest level it has been at in the past three years. Despite this, Bitcoin’s price continues to soar. Thus, it appears that the two dynamics are interrelated yet not mutually exclusive.



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