Bitcoin Network Activity Slumps To One-Year Low
According to recent crypto studies postalBitcoin (BTC) network activity has fallen to a 12-month low, while CryptoQuant’s Bitcoin network activity index is currently at its lowest level since February 2024.
Bitcoin network activity declines as markets consolidate
Data from CryptoFant’s Bitcoin Network Activity Index shows that activity has dropped by 15% from its peak in November 2024. As of February 5, the index was 3,760, marking its lowest level in the past year.
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The decline in network activity is mainly attributed to a sharp decline in the number of transactions on the Bitcoin network. Starting from the all-time high (ATH) of 734,000 transactions in September 2024, the total daily transactions fell 53% to 346,000.
According to CryptoQuant, this downturn in BTC network activity is largely due to the decline in the use of rune protocols to use minting tokens on the blockchain. The post explains:
This is evident in the total daily number of OP return codes in Bitcoin transactions, which protocol is used to write data about coining programs and transfers on the network. When the Rune Protocol appeared in April 2024, the number of OP return codes per day soared to 802K. However, since then, the number of OP return codes has plummeted, using only 10K OP return codes.
For beginners, Rune Protocol is the new standard standard for BTC, designed to be created directly on the network without linking data or complex smart contracts. Its purpose is to be more efficient and scalable than previous Bitcoin symbolization methods such as Ordinals and BRC-20.
Further evidence of reduced network activity is visible in Bitcoin Mempool traffic. The total number of pending transactions waiting to be confirmed in the Bitcoin block fell by 99%, from 287,000 in December 2024 to 3,000 as of February 5, 2025. Especially since March 2022, this is the lowest level of Mempool traffic.
Is BTC overvalued at its current price?
Analysis shows that the fair value of Bitcoin currently falls between $48,000 and $95,000 based on network activity. This means that BTC’s current market price is around $98,000, which may be overvalued.
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However, another crypto contributor debate Current Bitcoin prices offer strong buying opportunities for investors who want to hold an average stake. Similarly, another analyst suggestion BTC’s recent market performance shows that it is in the distribution stage of the market cycle.
Despite short-term concerns, BTC’s long-term outlook remains bullish. Recently a Standard Chartered Executive predict By the end of 2025, the Bitcoin could reach $200,000. At press time, BTC was trading at $97,914, down 0.1% in the past 24 hours.
Featured images from Unsplash, charts from TradingView.com
