Bitcoin Network Activity Drops to 1-Year Low, But Long-Term Holders Point to Bullish Outlook
Bitcoin network activity has fallen to its lowest level in a year, with a noticeable decline in transaction volume and mempool activity. However, an increase in accumulation by long-term holders suggests that Bitcoin’s price could rise in the months ahead, according to a recent CryptoQuant report.
The Bitcoin Network Activity Index, which tracks metrics such as active addresses, transaction volume, block size, and fees, has dropped 15% from its November 2024 peak, reaching 3,760 on Friday—its lowest level since February 2024.
A significant driver of this decline has been the drop in daily Bitcoin transactions, which have decreased to 346,000, down 53% from a peak of 734,000.
Additionally, Bitcoin’s mempool—where unconfirmed transactions wait to be processed—has seen a dramatic drop, falling from 287,000 in December to just 3,000 as of Thursday. This represents a 99% decline, the lowest level since March 2022.
CryptoQuant pointed to the reduced usage of the Runes Protocol, introduced in April 2024 for minting fungible tokens on the Bitcoin network, as a key factor behind the drop in activity.
“The sharp decrease in Bitcoin network activity can be largely attributed to the waning use of the Runes Protocol,” CryptoQuant stated. The report emphasized the decline in OP RETURN codes, which are used by Runes to store data about token mints and transfers. OP RETURN code usage peaked at 802,000 daily but has since fallen to just 10,000.
Despite the slowdown in network activity, Bitcoin’s price remains poised for growth due to increasing demand from long-term holders. These investors, who consistently accumulate BTC without selling, are seen as less likely to add selling pressure to the market, making the asset more stable and potentially increasing its price over time.
As a result, Bitcoin continues to be perceived as a store of value, and the growing number of permanent holders could contribute to a bullish market trend in the near future.
