Key Points
- Bitcoin’s network activity index has dropped 15%, indicating reduced on-chain transactions and a shift in market dynamics.
- Mempool transactions have decreased by 99%, suggesting slowed speculation and transactional engagement.
Bitcoin’s network activity has seen a significant decrease, with key metrics indicating a decrease in on-chain transactions.
The Bitcoin Network Activity Index has decreased by 15% since its record high in November 2024, reaching its lowest level since February 2024. This decrease has also caused the index to fall below its 365-day moving average.
Bitcoin’s Network Activity Index
The Bitcoin Network Activity Index is a key measure of fundamental growth, tracking metrics such as active addresses, transaction counts, and block size. The current downturn in the index suggests reduced participation, lower network congestion, and a decrease in transactional demand. This decrease in the index is often associated with periods of market uncertainty or profit-taking cycles.
The fact that the index has fallen below its long-term moving average signals a shift in network dynamics reminiscent of previous bearish phases. If the trend continues, Bitcoin’s broader adoption and on-chain usage could see further slowdowns.
Mempool Data and Network Demand
Bitcoin’s mempool data further supports the trend of declining activity. The total number of transactions waiting to be confirmed has dropped from 287,000 in December 2024 to around 3,000, marking a 99% decline. A nearly empty mempool typically indicates reduced transaction demand and is often seen during periods of reduced speculation or when on-chain activity shifts towards custodial and off-chain solutions.
Despite the declining network activity, Bitcoin’s price has remained strong. However, key indicators suggest potential risks ahead. The 50-day Moving Average (MA) stood at $98,743, while the 200-day MA is positioned at $78,512, reinforcing a longer-term bullish structure. But, Bitcoin was hovering near its short-term resistance level, and a failure to maintain momentum could invite further downside pressure.
The ongoing decline in network activity and mempool congestion raises questions about Bitcoin’s immediate growth trajectory. If Bitcoin is to sustain its long-term uptrend, a resurgence in active addresses, transaction volumes, and mempool congestion would be needed to confirm broader adoption and demand.
Macroeconomic factors, such as institutional buying and ETF inflows, will also play a crucial role in dictating Bitcoin’s next major move. For now, Bitcoin traders and investors should watch for signs of renewed network demand. If on-chain metrics remain subdued, Bitcoin may struggle to reclaim new highs in the near term.