Bitcoin Network Activity: A Comprehensive Overview
Our analysis provides insights into the current state of Bitcoin’s network activity as reviewed by leading industry experts and seasoned editors. Discover how the asset strives to maintain its value above the $105,000 threshold amidst a significant slowdown in on-chain transactions.
Analyzing the Decline in On-Chain Transactions
Bitcoin’s network has witnessed a marked decrease in daily transactions, reaching its lowest point since late 2023. Despite Bitcoin’s earlier bullish surge, where it surpassed $111,000, there appears to be a disconnect between its price trajectory and the foundational blockchain operations.
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High-Value Transactions: The New Norm
The decline in transaction volume is mainly attributed to reduced non-monetary usage, such as Inscriptions and Runes, which previously bolstered on-chain traffic. At its peak in 2024, the network handled over 734,000 daily transactions, but recent figures indicate a drop to between 320,000 and 500,000 transactions per day.
Shift in Transaction Dynamics
While overall transaction numbers have dipped, there is a notable increase in the average transaction size. This trend signifies that large holders—such as institutions and affluent investors—are increasingly leveraging Bitcoin’s base layer for substantial value transfers. Currently, the Bitcoin blockchain processes approximately $7.5 billion daily, with a historical peak of $16 billion during the November 2024 price surge. The average transaction now values at $36,200.
Whale Dominance on the Rise
Transactions surpassing $100,000 now comprise 89% of the total volume, a significant jump from 66% in late 2022. Conversely, smaller transactions below $100,000 have dwindled to 11% of the overall volume, down from 34%. This shift suggests an increasing dominance of large investors on-chain, as smaller investors explore other avenues. Concurrently, miner revenue from transaction fees has notably decreased, currently averaging $500,000 daily, marking one of the lowest points in the past 18 months.
Migration to Off-Chain Platforms
As on-chain activity wanes, trading is progressively moving to off-chain platforms, particularly centralized exchanges. The futures market has witnessed an average daily volume of $57 billion over the past year, peaking at $122 billion. In contrast, spot trading volumes are significantly lower, with an average of $10 billion daily and a peak of $23 billion. The total off-chain activity now surpasses on-chain activity by a factor of seven to sixteen.
The Impact of Bitcoin ETFs and Derivatives
The introduction of spot Bitcoin ETFs in the United States in early 2024 has likely influenced this trend. Additionally, there has been a notable expansion in leverage across derivatives markets, with the total open interest in Bitcoin futures and options soaring to $96 billion—a near nine-fold increase from 2020 levels.
Stablecoins as Collateral
Following the collapse of FTX, stablecoins have increasingly been used as collateral instead of crypto assets. Analysts view this as an evolution towards a more mature and risk-managed structure within the crypto finance sector.
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