Bitcoin Network Sees 57% Decline in Daily Transactions as Institutional Activity Surges

Cryptocurrency analysis company Glassnode has released its latest report evaluating the current state of Bitcoin and the broader cryptocurrency market. The report highlights a significant shift in on-chain activities, with a notable decrease in the number of daily transactions on the Bitcoin network. Despite this decline, the total value transferred on the network has remained high, indicating that large investors and companies are becoming more dominant in on-chain activities.

The report notes that while the number of daily transactions on the Bitcoin network peaked at 734,000 in 2023 and 2024, this figure has since decreased to a range of 320,000 to 500,000 transactions per day. However, the economic value carried on the Bitcoin network continues to be substantial, with an annual average daily transfer of $7.5 billion and a peak of $16 billion in November 2024. The average volume of each transaction is currently around $36,200, suggesting that the Bitcoin network is increasingly used for high-value transfers, with individual users relatively decreasing.

The report also emphasizes the growing influence of institutional investors and high-net-worth individuals in on-chain activities. The share of transactions over $100,000 in the total transaction volume on the network has increased from 66% in November 2022 to 89% today. This trend indicates that institutional investors are playing a more significant role in the Bitcoin ecosystem.

Despite Bitcoin being just 6% away from its all-time high of $111,700, transaction fees remain low, and demand for block space is weak. This divergence from previous cycles, where high prices were accompanied by increased network congestion and transaction fees, is attributed to the shift of activity to off-chain platforms. Centralized exchanges (CEX) currently account for the majority of cryptocurrency trading volume, with spot, futures, and options trading collectively exceeding on-chain trading by 7 to 16 times. This suggests that most investors are opting for centralized platforms over on-chain transactions.

The report also highlights the increasing amount of leveraged transactions in the market, with the total value of open positions in the futures and options markets reaching $96.2 billion. However, it notes that the collateral used in open positions has become healthier, with positions collateralized by stablecoins now constituting the majority. This development is seen as a positive sign for the market's stability.

Another analysis company has released a critical weekly report on Bitcoin, questioning the health of the cryptocurrency in the current market situation. The report comes at a time when Bitcoin has shown significant price movements, with the cryptocurrency recently surpassing the 105,000 USDT mark, trading at 105,029.99 USDT. This price point reflects a 0.38% rise, indicating a period of relative stability for Bitcoin. The report suggests that the likelihood of Bitcoin falling below 100,000 USDT has decreased, as the cryptocurrency has shown staying power around the 105,000 USDT level. This stability is further supported by the Federal Reserve's decision to maintain interest rates, which has contributed to a 0.43% increase in Bitcoin's value over the past 24 hours, trading at 104,364 USDT.

The analysis company's report highlights several key factors that could influence Bitcoin's health in the current situation. One of the primary concerns is the potential impact of companies using debt to purchase Bitcoin. This practice could lead to a decrease in demand for Bitcoin, as companies may face financial difficulties if the value of Bitcoin drops. This could, in turn, hurt the overall health of the cryptocurrency market. The report also notes that while some companies have made significant investments in Bitcoin, others have expressed skepticism about the long-term viability of the cryptocurrency. For example, the founder of a prominent investment firm has stated that he is not convinced by the hype surrounding Bitcoin as a treasury asset, suggesting that it could become out of fashion and hurt Bitcoin's value.

Despite these concerns, the report also highlights several positive factors that could support Bitcoin's health in the current situation. One of the key factors is the increasing adoption of Bitcoin by mainstream companies and institutions. For example, the report notes that a cryptocurrency firm has announced plans to purchase a massive 1,000 BTC with new funding, indicating a growing interest in Bitcoin as an investment asset. Additionally, the report highlights the potential for Bitcoin to be used as a stablecoin, with a major payment processor recently broadening its stablecoin operations in new regions. This could provide a new use case for Bitcoin and help to stabilize its value in the long term.

In conclusion, the analysis company's report provides a nuanced view of Bitcoin's health in the current market situation. While there are several factors that could potentially hurt Bitcoin's value, there are also positive developments that could support its long-term growth. As the cryptocurrency market continues to evolve, it will be important for investors to stay informed about these developments and to make informed decisions about their investments in Bitcoin.