A BIS study found that commonly used crypto metrics can mask underlying economic activity, with measurement difficulties affecting Bitcoin, Ethereum and stablecoins.
Researchers at the Bank for International Settlements found that estimates of Bitcoin’s onchain transfer value can differ by as much as sixfold, depending on the method used to measure transactions.
The finding focuses on Bitcoin’s onchain transfer values rather than trading volumes recorded on crypto exchanges. The sixfold difference stems from variations in measurement approaches, including how analysts account for change outputs and other transfers sent back to the original sender.
The gap is largely driven by the way Bitcoin transactions are structured. When users spend Bitcoin, any unspent amount is often returned to the sender as change, which may be counted as an additional output even though the funds are not actually transferred to another party.
The researchers wrote that metrics including transaction volumes, market capitalization and total value locked can appear more precise than the underlying data actually supports.
The measurement challenge also affects Bitcoin’s market capitalization. Researchers found that the conventional figure has sometimes been up to four times higher than realized capitalization, which assigns each coin a value based on the price at which it last moved.
The study analyzed 100 billion blockchain records from Bitcoin, Ethereum and Tron, finding that comparable measurement difficulties appear throughout the wider crypto ecosystem.
Ethereum and Stablecoins Bring Additional Challenges
Ethereum posed a separate measurement challenge due to the widespread use of smart contracts. Among roughly 67.5 million active contracts analyzed, around 54 million could not be classified under the categories used in the study.
Stablecoin activity creates another measurement challenge because the same asset can perform different functions across blockchain networks. On Ethereum, USDT was more closely associated with DeFi activity, while on Tron, it was used more for payment-related and store-of-value purposes.
The contrast was especially pronounced in smart contract holdings. Smart contracts on Ethereum held more than 20% of USDT in 2022, compared with roughly 1% on Tron. Given these differing use cases, the researchers said combining USDT activity across blockchains can blur distinct forms of economic activity and make actual stablecoin usage harder to understand.
The BIS researchers concluded that onchain indicators should be viewed as “imprecise estimates rather than direct measures of economic activity.”
Visa Filters Stablecoin Data to Better Reflect Economic Activity
Some analytics firms already separate raw blockchain activity from adjusted metrics designed to provide a clearer picture of underlying economic activity.
Visa’s Onchain Analytics dashboard, powered by data from Allium Labs, shows both overall and adjusted stablecoin transaction volumes. Visa said its adjusted methodology seeks to reduce potential distortions caused by activities such as high-frequency trading, bots, bridge routing and internal exchange transactions.
The dashboard currently records $6.4 trillion in total stablecoin transaction volume across the networks it monitors over the past 30 days, compared with $313.1 billion in adjusted volume.
