Bitcoin Hits $97,000 But Network Activity Lags
1min read Bitcoin's price has surged to an impressive $97,000, marking a significant milestone in its recent performance. However, this price surge has not been accompanied by a corresponding increase in network activity, which has remained notably weak. Key network metrics, such as the number of Active Addresses and transactions, have not reflected the overall market enthusiasm, raising questions about the sustainability of Bitcoin's price gains.
According to Alphractal analysis, there are six main reasons behind Bitcoin’s stagnant on-chain activity. Firstly, the current price is driven by external factors, such as capital inflows through Spot ETFs and institutional interest, rather than real blockchain usage. This is evidenced by the continued accumulation of MicroStrategy, Metaplanet, and BlackRock’s spot ETFs. Secondly, Bitcoin's price volatility has been unusually low, with weeks of consolidation between $92K and $95K, leading to fewer incentives for investors to act and resulting in fewer on-chain transactions.
Thirdly, Bitcoin is experiencing artificial Exchange Volumes, where some Exchange Volumes are likely inflated, creating a misleading sense of activity while real network usage stays modest. Additionally, usage has shifted elsewhere, with other networks such as Ethereum, Solana, and Base attracting DeFi, staking, and memecoin activity. This shift in usage has left Bitcoin struggling significantly, as speculative use gradually moves to other chains where there’s high traffic. For instance, the Solana chain has become dominant for memecoins, while Ethereum is staking.
Furthermore, Bitcoin’s appeal as a practical payment network has taken a backseat, with prices growing faster than the network activity. This situation is unsustainable, and prices might face a correction to meet the actual demand. Finally, the adoption of second layers like the Lightning Network is growing faster, with more transactions shifting off-chain, especially to the Lightning Network. This positions Bitcoin in a challenging situation where Layer 2 is seeing more demand and usage.
In conclusion, Bitcoin’s high price does not necessarily mean increased blockchain usage. We are witnessing a shift where Bitcoin is treated more like a financial asset, while on-chain dynamism is happening elsewhere. Ultimately, price alone doesn’t tell the full story. Bitcoin’s strong performance on the charts has not translated into increased network usage. This shift suggests that Bitcoin is increasingly being treated as a macro financial asset—not as a decentralized currency built for everyday use.
Historically, network growth—especially from retail users—has played a crucial role in sustaining Bitcoin rallies. But now, with institutions dominating flows and retail largely on the sidelines, momentum may prove harder to maintain. Unless on-chain demand picks up, Bitcoin’s price growth could face structural limits. This situation highlights the importance of monitoring network activity alongside price movements to gain a comprehensive understanding of Bitcoin's health and potential future performance.
