Bitcoin Network Activity Drops 15% - Reaches Lowest Level in a Year: Prospects and Signs

In the context of the volatile cryptocurrency market, Bitcoin - the leading digital currency - is experiencing a significant decline in on-chain activity. The latest data shows that Bitcoin’s Network Activity Index has decreased by 15% since November, reaching a record low of 3,760 - the lowest level since February 2024. This article will analyze in detail the factors leading to this decline, as well as the prospects and forecasts for the future of Bitcoin.

1. Notable Numbers Network activity index: Since November, the Bitcoin blockchain activity index has decreased by 15%, reaching 3,760. This number is calculated based on various factors such as the number of active addresses, transactions, block size, and transaction fees, forming a comprehensive measure of the network’s usage. Daily transaction volume: On a recent Friday, the number of transactions on the chain decreased by 53%, from 734,000 transactions to 346,000 transactions. This decline contributes to the slowdown and inefficiency of network operations. Mempool status: Mempool - where unconfirmed transactions are temporarily stored - has also seen a significant decrease. The number of transactions in the mempool has decreased by over 99%, from 287,000 transactions in December to only about 3,000 transactions on a recent Thursday. This indicates a significant reduction in the backlog of unprocessed transactions, reflecting a trend of decreased network congestion.
2. Factors Contributing to the Decline Low transaction fees and fast confirmation times: One of the reasons for the decrease in on-chain activities is low transaction fees and fast confirmation times. When transactions are processed quickly and transaction costs are no longer a barrier, congestion on the network decreases, but it also means that the number of transactions on the chain may decrease, especially when the demand for transactions is not strong enough to compensate. Changes in market psychology: Some experts believe that the decline in on-chain activity may reflect a decrease in Bitcoin user transaction demand. When investors and users do not conduct many transactions on the chain, this could be a sign of a market sentiment shifting towards negativity or less excitement. Lesson from the past: Many people recall the event in July 2021, when Bitcoin’s on-chain activity sharply decreased after China banned cryptocurrency mining. Although the current context is different, the impacts from previous management policies and market fluctuations are still valuable lessons for investors.
3. Analysis from Experts and Market Situation Current Bitcoin price: According to data from CoinMarketCap, Bitcoin is currently trading at around $97,860.44, up 1.33% in a day. Although this index shows a slight growth, the decrease in on-chain activity may make investors reconsider the strength behind this price increase. Viewpoint from Standard Chartered: Standard Chartered Bank argues that if interest rates remain stable and the economy maintains good health, Bitcoin will have an advantage in developing as a risky asset. Geoff Kendrick, the bank’s digital asset research expert, points out that the 10-year bond yield below 4.50% indicates that the Fed is not overly tightening monetary policy, creating a “Goldilocks zone” for risky assets like Bitcoin. Prospect of breaking the $100,000 milestone: Based on positive analysis from experts and current strengthening trends, it is forecasted that Bitcoin may break the $100,000 mark in the near future. However, in the context of declining on-chain activities, closely monitoring technical indicators and market sentiment is essential.
4. Conclusion: Caution and Proactivity in the Context of Change Although activity on the Bitcoin network is declining, macroeconomic factors such as the Fed’s monetary policy and the global economic situation may continue to drive Bitcoin. The decrease in on-chain transactions may also be a sign of improved transaction processing efficiency due to low fees and fast confirmation times, but it is also a warning of potential reduced demand from users. Investors and interested parties need to closely monitor on-chain indicators while considering macroeconomic factors to make informed investment decisions. While many experts believe that Bitcoin has the potential to reach $100,000, the current market context also requires caution and continuous evaluation of the movements of technical indicators and market sentiment. In the coming time, Bitcoin will continue to be the focus of attention in the cryptocurrency community, and the current fluctuations will be valuable lessons for investors in risk management and seizing opportunities.