Bitcoin On-Chain Activity Declines, Signaling Market Indecision Amidst Price Stability

Bitcoin On-Chain Activity Declines, Signaling Market Indecision Amidst Price Stability

Bitcoin’s on-chain activity has plummeted to near-historic lows, signaling a notable slowdown in transactions since the cryptocurrency reached a new all-time high price, according to insights from data analytics firm Sentiment.

In an update on May 11, Sentiment revealed that on-chain activity on the Bitcoin network has dipped to levels not seen since 2019. Metrics such as transaction volume, daily active addresses, and whale transaction count have all experienced a visible downtrend, reflecting subdued network activity.

Transaction volumes on the Bitcoin network are approaching their lowest level in a decade, while the number of daily active addresses has dwindled to its lowest since January 2019. Furthermore, whale transactions, typically exceeding $100,000, have slowed considerably, reminiscent of levels last observed in December 2018.

While the decline in on-chain activity may evoke concerns, analysts at Sentiment caution against directly correlating it with impending BTC price drops, as seen in recent weeks. Instead, they attribute the slowdown to “crowd fear and indecision” among traders, underscoring the intricate relationship between on-chain activity and market sentiment.

Despite these challenges, Bitcoin’s price has remained relatively steady, hovering just above $61,000 at the time of writing, with a marginal 0.1% increase in the past day. However, the coin’s 24-hour trading volume has dipped by over 37%, reflecting subdued market activity.

Over the past week, Bitcoin’s price has recorded a 4.6% decline, underperforming the broader crypto market, which is down by 4.2%, according to data from CoinGecko.

As investors navigate through this period of consolidation and subdued on-chain activity, market sentiment and broader economic factors are expected to play a pivotal role in shaping Bitcoin’s trajectory in the coming weeks.

In parallel, the Runes protocol on Bitcoin has witnessed notable activity, raking in $135 million in transaction fees on the cryptocurrency’s largest blockchain, according to Dune Analytics. While activity surged initially after the halving, it has since slowed, with Friday, May 10, marking the lowest level of activity on the Runes protocol, as reported by The Block.

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