BIS Study Reveals Significant Discrepancies in Bitcoin Onchain Transfer Value Estimates
A recent study by the Bank for International Settlements (BIS) has revealed that estimates of Bitcoin onchain transfer values can differ by as much as sixfold depending on how transactions are counted. This discrepancy arises from Bitcoin's transaction structure, including how change outputs returned to senders are treated, which also impacts market capitalization assessments. Similar measurement challenges extend to Ethereum and stablecoin activities, complicating interpretation of blockchain economic activity. Although some analytics providers attempt to filter raw data to better reflect genuine economic activity, experts advise considering onchain metrics as noisy approximations rather than precise measurements.
Discrepancies in Bitcoin Transaction Measurement Methods
The Bank for International Settlements (BIS) study revealed that estimates of Bitcoin transfer volumes on the blockchain may differ by as much as six times depending on the transaction counting method used. This variation is rooted in Bitcoin’s unique transaction structure, whereby unspent funds are often returned to the sender as ‘change’. These change outputs are recorded as separate transaction outputs, even though they do not reflect transfers to different parties.
The main driver of this discrepancy lies in how such change outputs and other returns to the sender are treated in statistical analyses. As a result, aggregate onchain transfer figures may substantially overstate the actual amount of value transferred between distinct users.
Additionally, the BIS noted that these measurement issues also affect Bitcoin market capitalization figures. Traditional capitalization measures have sometimes been up to four times higher than the realized capitalization, which values coins based on the price at which each was last moved.
Broad Observations and Cross-Crypto Measurement Challenges
The research analyzed 100 billion blockchain records spanning Bitcoin, Ethereum, and Tron, finding that challenges in accurately interpreting onchain data are common across these platforms.
Ethereum, in particular, presented additional obstacles due to the widespread use of smart contracts. Of the approximately 67.5 million active contracts examined, about 54 million could not be categorized under the study’s classification system.
When it comes to stablecoins, interpretation becomes even more complex as the same asset can fulfill different functions across blockchains. For example, USDT on Ethereum is more closely linked to decentralized finance (DeFi) activities, whereas on Tron it is mainly used as a payment tool and store of value.
Impact of Varied Stablecoin Use Cases
USDT held by smart contracts on Ethereum accounted for over 20% in 2022, compared to about 1% on Tron, highlighting the differing economic roles the token plays on each network.
Because of these divergent use cases, aggregating USDT activity across blockchains can mix distinct types of economic actions, making it difficult to accurately interpret stablecoin usage.
The BIS researchers concluded that onchain indicators should be viewed as noisy approximations rather than exact measures of economic activity.
Data Filtering Practices by Analytics Providers and Visa’s Example
Some analytics providers, including Visa, differentiate between raw blockchain activity and adjusted metrics intended to better reflect genuine economic activity.
Visa’s Onchain Analytics dashboard, powered by data from Allium Labs, displays both total and adjusted stablecoin transaction volumes. The adjusted methodology seeks to remove distortions caused by high-frequency trading, bots, bridge routing, and internal exchange transactions.
Over the past 30 days, total stablecoin transaction volume across the networks tracked by the dashboard was $6.4 trillion, whereas the adjusted volume stood at $313.1 billion—demonstrating significant differences in the interpretation of onchain activity.
Why it matters
The BIS study highlights fundamental challenges in blockchain data analytics, particularly concerning Bitcoin and Ethereum due to transaction structure complexities and diverse asset usage scenarios. Understanding these issues is crucial for market participants and regulators, as onchain activity metrics often underpin assessments of cryptocurrency economic significance, investment decisions, and policy making. The findings demonstrate that traditional metrics can substantially overstate actual transfer activity and capitalization, and aggregating data across blockchains without regard for differing use cases can misrepresent the true state of the crypto economy.
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