Afterwards making a potent recovery from $3,775 to $6,450, Bitcoin's (BTC) price has traded in a tight range which has seen the price struggle to push above resistance at $6,400 and $half dozen,850. Despite the current pullback, technical indicators similar the Stock-to-Menses model and the network'southward consistent growth in hash charge per unit show that investors have regained a small amount of conviction.

Another factor worth because is Bitcoin's mempool size as it also can provide some insight into how buyers and sellers are reacting during these uncertain times.

Cryptocurrency market weekly overview. Source: Coin360

Cryptocurrency market place weekly overview. Source: Coin360

The mempool is where all the unconfirmed Bitcoin transactions wait until all confirmations are released to conclude each transaction. The college the mempool size, the longer it takes for transactions to be confirmed since more blocks take to be confirmed (more power input).

If a jam occurs in the memory pool due to an abnormal size of transaction waiting to exist confirmed, the higher the probability to incur in a higher transaction fee to expedite it promptly.

Bitcoin's mempool size reached a record-high value at over 130MB/cake during January 2022, days later on Bitcoin toll slightly crossed its all-fourth dimension high at $twenty,000.

Bitcoin Mempool size (in MB/Block) since June 2022-March 2022. Source: Blockchain.com

Bitcoin Mempool size (in MB/Block) since June 2022-March 2022. Source: Blockchain.com

This could advise a relationship betwixt the number of transactions waiting to exist confirmed and Bitcoin's price. If that is the case, the relationships would be changed in times of corrections such as the i investors are facing now.

2020 shows an inverse relationship in Bitcoin mempool size and toll

Because a period from February. 19 until March xiii, when Bitcoin lost 60%, nosotros detect that the correlation between the Bitcoin mempool size and its price is negative at -41.2%. This is a very high human relationship because that this correlation for the unabridged 2022 menstruation available is almost non-pregnant at ii.34%.

A correlation of 100% means that the Bitcoin price and the mempool size move completely in the aforementioned direction, while -100% correlation means they are inversely related. A correlation of 0% means that the variables are not related in any way.

Current action mirrors 2022

In correction periods during 2022, where Bitcoin lost more than 20% in price, we find the same negative human relationship between the mempool size and Bitcoin price, fifty-fifty though both have a high difference in values — one period is very inversely correlated (-83.1%) and the other period very slightly negative (-4.6%).

In the half dozen periods where a correction of upwardly to a 20% decrease in price during 2022 and 2022, nosotros notice an inconclusive relationship across the correlations and this makes information technology impossible to attain a solid conclusion.

Correlation between Bitcoin price and its mempool size for different correction periods during 2022

Correlation between Bitcoin cost and its mempool size for different correction periods during 2022

However, if we look closely at the two periods that occurred during the second half of 2022 when Bitcoin ended upwards reaching its record price, both periods show an inverse relationship betwixt the mempool size and Bitcoin toll.

Between Nov. 8 and Nov. 12, this relationship was very negative (-85.nine%), while between Dec. 17 and Dec. 25, the correlation is very small (-5.6%).

Correlation between Bitcoin price and its mempool size during 2022 correction periods

Correlation between Bitcoin cost and its mempool size during 2022 correction periods

Positive human relationship in 2022

During 2022, four out of the five correction periods identified showed a positive correlation between the Bitcoin mempool size and its price, except for the last periods, which showed a slight negative correlation.

Correlation between Bitcoin price and its mempool size during 2022.

Correlation betwixt Bitcoin price and its mempool size during 2022

Positive correlation in total-year periods

When considering the human relationship during each yr instead of just analyzing the corrective periods, we find a clear trend and a positive correlation between the mempool size and Bitcoin'southward price.

Moreover, a high correlation is seen in 2022 (eighty.eight%) and 2022 (72.two%), despite not being able to draw a conclusive tendency when analyzing the correction periods within those years. The positive tendency, although small in magnitude, is as well seen between both variables in 2022 (26.3%) and 2022 (9.5%). While in 2022, the relationship is practically non-existent (2.34%).

"There is and then much BTC in transit"

Last week, at that place has been an increase in the mempool size even as Bitcoin's toll is going down. Looking forrard, we may see the continuation of this inverse relationship contributes to the doubtfulness of Bitcoin's price in the brusque-term.

As Cointelegraph markets analyst filbfilb recently pointed out:

"I just tin't be long while I know in that location is so much BTC in transit."

The amount of Bitcoin mayhap being moved into and out of exchanges in the last week's raises farther doubts most the inverse human relationship between the mempool and Bitcoin price.

Data for the mempool size drawn from Blockchain.com and prices from coinmarketcap.com. The views and opinions expressed here are solely those of the author and do non necessarily reflect the views of Cointelegraph. Every investment and trading motion involves risk. You should behave your own research when making a decision.