Bitcoin's Activity Declines to Lowest in a Year, Indicators Suggest Positive Price Trends
A substantial drop in bitcoin transactions and a rise in long-term holder demand may indicate potential price growth ahead.
Key Insights:
- Bitcoin’s network activity has seen a sharp decline, largely attributed to reduced usage of the Runes Protocol, which facilitates token issuance on the Bitcoin network.
- Despite this drop in activity, demand from long-term bitcoin holders has surged, suggesting overall price growth may continue.
One bitcoin (BTC) holder metric indicates potential future price rises, despite a recent activity dip, according to a CryptoQuant analysis. Their Bitcoin Network Activity Index has decreased by 15% since its height in November 2024, landing at 3,760—its lowest since February 2024. This index reflects various usage metrics, including active addresses and transaction volume.
Recent figures show daily transactions plummeting to 346,000, a 53% decrease from the previous high of 734,000. Meanwhile, the Bitcoin mempool—holding all unconfirmed transactions—has dropped from 287,000 in December to just 3,000, marking a nearly 99% decrease.
CryptoQuant links this significant downturn to the declining use of the Runes Protocol for minting tokens. They stated:
“The decline in Bitcoin’s network activity can be mostly explained by the collapse in the use of the RUNES protocol to mint tokens on the Bitcoin network.” Translation: 这种比特币网络活动的下降主要可以用 RUNES 协议在比特币网络上铸造代币使用的崩溃来解释。
However, the firm also noted that this activity reduction might not directly influence bitcoin prices, which are expected to grow due to rising demand from long-term accumulator addresses.
“Bitcoin Permanent Holder demand is accelerating. Historically, this signals strong confidence and often precedes rallies.” - CryptoQuant.com (source)
In summary, while the current transactional activity is at a low, the increase in long-term holders points towards a positive outlook for bitcoin prices.
