Despite a 1-Year Low in Bitcoin Activity, These Indicators Suggest a Bullish Breakout: CryptoQuant

Bitcoin Network Activity Drops to 1-Year Low, but Long-Term Holders Signal Bullish Trend

Bitcoin’s on-chain activity has fallen to its lowest level in a year, marked by a sharp decline in transactions. However, rising accumulation by long-term holders suggests that Bitcoin’s price could see upward momentum in the coming months, according to a recent CryptoQuant analysis.

CryptoQuant’s Bitcoin Network Activity Index, which tracks active addresses, transaction count, block size, and fees, has declined 15% from its record high in November 2024. As of Friday, the index stands at 3,760, the lowest level since February 2024.

A key driver of this decline is the drop in daily Bitcoin transactions, which have fallen to 346,000—a 53% drop from the peak of 734,000.

The slowdown is also evident in Bitcoin’s mempool, where unconfirmed transactions have plummeted. From a high of 287,000 in December, the mempool volume has dropped to just 3,000 as of Thursday—a 99% decline, reaching levels last seen in March 2022.

CryptoQuant attributes this decline largely to the falling usage of the Runes Protocol, a mechanism introduced in April 2024 that enabled the creation of fungible tokens on Bitcoin.

“The decrease in Bitcoin’s network activity is primarily due to the collapse in Runes Protocol usage,” CryptoQuant noted. The firm highlighted a major drop in OP RETURN codes, a feature Runes used for recording token minting and transfers. At its peak, Runes activity drove OP RETURN usage to 802,000 transactions per day, but that figure has now fallen to just 10,000.

Despite this slowdown, Bitcoin’s price may remain strong due to increasing demand from long-term holders. Accumulator addresses—wallets that consistently acquire BTC without selling—have grown in recent weeks, a trend historically linked to Bitcoin price rallies.

As these long-term investors reduce sell-side pressure, Bitcoin’s perception as a store of value strengthens, potentially setting the stage for future price appreciation.