FameEX Hot Topics | Bitcoin Network Activity Drops to Lowest Point in a Year

Bitcoin's network activity has dropped to its lowest point in a year, signaling a sharp decline from the previously high levels of engagement. Research conducted by Cryptoquant indicates a significant decrease in user activity and transactions on the Bitcoin network, highlighting a shift in the overall dynamics of the blockchain.

According to Cryptoquant’s Bitcoin Network Activity Index, a key metric used to track transactions and network engagement, the index has fallen by 15% since November 2024. It now stands at 3,760, marking its lowest level since February 2024. Additionally, the number of daily Bitcoin transactions has also sharply decreased. From a peak of 734,000 daily transactions in September 2024, the number has plummeted to just 346,000, reflecting a 53% drop in activity. This downward trend suggests that the Bitcoin network is facing a period of lower engagement.

One of the main factors contributing to this decline, as noted by Cryptoquant, is the collapse in usage of the Runes protocol. The Runes protocol was introduced as a way to mint tokens on the Bitcoin network, but its rapid decline in use has had a significant impact on overall network activity. A clear indicator of this drop is the decrease in the use of OP RETURN codes, which are employed in Bitcoin transactions to store data about token mints and transfers. These codes are essential to tracking token-related activities, and their sharp decline is reflective of reduced interaction with the protocol.

When the Runes protocol was launched in April 2024, it caused a surge in the number of OP RETURN codes, peaking at 802,000 daily codes. However, this number has dramatically fallen since then, with only 10,000 OP RETURN codes in use today. This reduction directly correlates to the decline in Bitcoin’s network activity, as fewer tokens are being minted and transferred through the network.

Cryptoquant’s report also highlights a drop in Bitcoin’s mempool, where unconfirmed transactions are temporarily stored before being confirmed by miners. A lower mempool suggests that fewer transactions are pending confirmation, further emphasizing the slowdown in Bitcoin network activity. Bitcoin's fair value is currently between $48,000 and $95,000, based on its network activity. Given Bitcoin’s current price of $98,000 to $99,000, researchers suggest that the cryptocurrency may be overvalued.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.