Bitcoin’s On-Chain Metrics Plummet To Bear Market Levels Despite Price Strength
Despite Bitcoin’s price being above $100,000 and close to its all-time high, on-chain metrics reveal a worrying decline. A report from Glassnode shows daily transactions have dropped significantly, indicating a bear market phase. Additionally, trading has shifted towards off-chain venues, with institutions playing a larger role in the market. The nature of transactions is changing as retail trader activity dwindles.
Bitcoin’s current price remains remarkably high, hovering just above $100,000, but there seems to be a stark contrast in its on-chain metrics. As indicated in recent findings from Glassnode, an analytics firm that focuses on blockchain activity, these metrics have plummeted to bear market levels. While the cryptocurrency seeks to breach its all-time high of $111,700, its fundamental blockchain activity tells a different story.
The report shows that despite Bitcoin’s price strength, blockchain activity has been noticeably quiet. Daily transactions have decreased significantly, dropping to between 320,000 and 500,000 — a far cry from the over 730,000 peak reached in 2024. This decline in transactions is concerning, especially for a network that typically surges with price increases. Crucially, the plummet is linked to less non-monetary activity like Inscriptions and Runes, which had previously driven transactional spikes.
While the average value of monetary transactions stays relatively stable, the overall drop in network usage introduces an unusual divergence. Traditionally, transactions would escalate alongside price rallies. Yet now, a counter-trend exists; Bitcoin’s blockchain processes massive transaction volumes, with an average daily volume around $7.5 billion, peaking at $16 billion during the late 2024 rally. But, these transactions seem to be consolidating among larger players, rather than engaging retail traders. It’s noteworthy that the average transaction value is just above $36,000, signaling a shift.
Interestingly, the dynamics of volume distribution are shifting as well. Retail-sized transactions—specifically those under $100,000—have dwindled substantially, representing less than 1% of total transferred value, decreasing from about 4%. This trend raises questions regarding the health and participation of smaller traders within the network.
Furthermore, the Glassnode report sheds light on miner revenues from transaction fees, which have reportedly diminished to around $558,000 daily despite Bitcoin’s lofty trading price. Although technical improvements like SegWit and transaction batching play a part in this decline, the sharp drop in miner revenue signals low demand for block space and fewer transactions occurring.
Conversely, trading is increasingly happening off-chain, chiefly on centralized exchanges, with spot volumes frequently exceeding $10 billion per day. Futures markets are significantly busier too, with daily volumes averaging around $57 billion and spikes topsy-turvy in excess of $120 billion. Options markets are also on the rise, processing over $2.4 billion daily. Altogether, off-chain platforms are handling 7 to 16 times the volume of what settles on the Bitcoin blockchain itself.
In summary, the findings from Glassnode illustrate a notable evolution in Bitcoin’s landscape, increasingly tilting towards institutional players rather than the traditional retail investors. As of the latest figures, Bitcoin trades at $103,470, reflecting a 2% decline over the past 24 hours. Analysts continue to wonder how these on-chain dynamics will affect the market moving forward.
In conclusion, Bitcoin’s current price continues to hover around $100,000, but the underlying on-chain metrics tell a much less optimistic tale. Transaction activity has decreased significantly, indicating potential shifts in market dynamics. With institutional investments dominating the ecosystem and retail participation waning, it remains to be seen how this will shape future trends in the Bitcoin landscape.
Original Source: bitcoinist.com
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