InflationRate_Cointime_adj

Tech spec

Brief Description: The inflation of newly issued Bitcoin in perspective of coinblock storage and vaulted supply.

InflationRate_Cointime_adj reflects the relative market impact of newly issued coins compared to the nominal inflation rate.
It accounts for the dynamics of coinblock storage and vaulted supply, offering a more nuanced view of Bitcoin's inflation than traditional measures. It is based on the Cointime Economic framework.

Interpretation InflationRate_Cointime_adj provides a deeper understanding of Bitcoin's market dynamics over different phases. For example, during the early years of Bitcoin (referred to as 'The Great Inflation' from Genesis to 2013), despite high block issuance, a large proportion of coins were lost or remained unspent by early miners. This led to a much smaller liquid supply in the market than what nominal terms would suggest. Hence, the Cointime-Adjusted Inflation Rate offers an alternative explanation of Bitcoin's inflation, considering both the issuance and the actual availability of coins in the market.

Advanced Explanation The InflationRate_Cointime_adj is influenced by the relationship between coinblock storage and vaulted supply. As coinblock storage increases, and more coins are absorbed off the market into vaulted supply, the net impact of additional coin issuance diminishes. This results in a lower Cointime-Adjusted Inflation Rate. Conversely, when fewer coins are stored and more reach the market, the Cointime-Adjusted Inflation Rate increases.

InflationRate_Cointime_adj = ( Annualized Issuance / Circulating Supply ) * A2VR

where A2VR is Active-to-Vaulting Ratio

Cointime Economics is a new framework for Bitcoin onchain analysis published by James Check and David Puell. References: https://ark-invest.com/white-papers/cointime-economics/ and https://insights.glassnode.com/introducing-cointime-economics/