A new metric has been launched by ARK Invest and on-chain data and information provider Glassnode to analyze the supply and demand dynamics of Bitcoin (BTC).
The metric, called “Cointime Economics”, aims to provide a more accurate picture of the actual economic weight of each Bitcoin on the network.
The Report Is Based On The Theory That Older Bitcoins Are More Valuable
According to a report by ARK Invest and Glassnode on Thursday, current metrics for measuring Bitcoin supply, such as adjusted supply and free-float supply, are subject to analyst judgments that can be prone to inaccuracies.
For example, the adjusted supply excludes Bitcoins deemed lost or unspendable, while the free floating supply excludes coins held by long-term investors or organizations.
The report argues that previous benchmarks failed to capture the true value of individual BTCs as they did not take into account when each Bitcoin was last traded. The report states, “The importance of a single Bitcoin should vary depending on when it last moved. The information value of a Bitcoin that hasn't moved in ten years is more important than a Bitcoin that hasn't moved for a week.”
To address this issue, the report introduces a new unit of measure called Coinblock, which measures the number of blocks produced during a BTC inactivity. The report claims that this unit reflects the opportunity cost of holding one BTC as well as its inflation-adjusted value.
According to the report, the new metric offers a more precise version of the market value-to-realized value (MVRV) ratio. It gives a more accurate measurement of Bitcoin's inflation rate, volume, and time-weighted cost basis over time.
*Not investment advice.