Bitcoin’s on-chain activity has fallen to a one-year low, but rising demand from long-term holders could point to bullish momentum in the coming months, according to a new analysis by CryptoQuant.
Bitcoin Network Activity Drops to 1-Year Low, But Long-Term Holders Are Sending Bullish Signals
The firm’s Bitcoin Network Activity Index has fallen 15% since its peak in November 2024 to 3,760 points, its lowest level since February 2024. The index tracks active addresses, transaction counts, block sizes, and fees to measure overall Bitcoin usage.
A major driver of the low network activity is the sharp decline in Bitcoin transactions.
- Daily transactions fell 53% to 346,000 from an all-time high of 734,000 last September.
- The Bitcoin mempool, a tail of unconfirmed transactions, has fallen from 287,000 in December to 3,000 as of today, marking levels not seen since March 2022.
CryptoQuant attributed this slowdown primarily to the decreasing use of the Runes Protocol, a method introduced in April 2024 for issuing tokens directly fungible on Bitcoin.
- At its peak, the protocol processed 802,000 OP_RETURN code transactions per day, but this figure has now dropped to just 10,000.
- “The decline in Bitcoin’s network activity can mostly be explained by the collapse in Runes Protocol usage,” CryptoQuant said.
Bullish Signals From Long-Term Holders
Despite the slowdown in network usage, Bitcoin’s price outlook remains positive due to increasing demand from long-term accumulator addresses.
- These addresses continually accumulate BTC without selling, reducing the available supply and relieving pressure on the sell side.
- Historically, increases in long-term holders have preceded Bitcoin rallies, strengthening BTC’s status as a store of value.
While the decrease in on-chain activity raises concerns, the increase in long-term accumulation suggests that Bitcoin may be preparing for its next bullish phase.
*This is not investment advice.
