Bitcoin Sees Lowest Activity in a Year, but Market Metrics Hint at a Potential Rally: CryptoQuant

Bitcoin Activity Dips to 1-Year Low, Yet Long-Term Holders Suggest Price Surge Ahead

Bitcoin network activity has reached its lowest point in a year, marked by a notable decline in transactions. However, CryptoQuant’s analysis points to growing accumulation by long-term holders, signaling potential bullish price action in the months ahead.

The Bitcoin Network Activity Index, a measure of active addresses, transactions, block size, and fees, has dropped 15% from its November 2024 peak, reaching 3,760 on Friday—its lowest level since February 2024.

This decline in activity is primarily driven by a reduction in daily Bitcoin transactions, which have fallen to 346,000, a sharp 53% drop from the high of 734,000.

Another sign of lower network activity is the Bitcoin mempool, which has seen a dramatic plunge from 287,000 unconfirmed transactions in December to just 3,000 on Thursday—a 99% drop, the lowest since March 2022.

CryptoQuant attributes much of this slowdown to the drop in Runes Protocol usage. The Runes Protocol, launched in April 2024 to issue fungible tokens on Bitcoin, has seen diminished activity.

“The main factor behind the decline in Bitcoin’s network activity is the sharp fall in the use of the Runes Protocol,” CryptoQuant said. The firm pointed to the plummeting use of OP RETURN codes—a key feature of Runes—used to record token minting and transfers. At its peak, OP RETURN usage hit 802,000 daily, but it has since dropped to only 10,000.

Despite these declines, Bitcoin’s price outlook appears positive due to growing demand from long-term holders. Data shows that permanent holders, addresses that consistently acquire BTC without selling, have been increasing in recent weeks. Historically, this trend has been linked to price rallies.

The rising accumulation and lack of sell-side pressure from long-term holders suggest Bitcoin’s potential to retain its value as a store of value, setting the stage for potential price growth.

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