Bitcoin Price Surges 100% But Network Activity Drops 23%

Bitcoin’s recent rally has been remarkable, with its price surging past $100,000. However, this price surge has not been accompanied by a corresponding increase in blockchain activity. On-chain metrics such as active addresses and transaction volumes have remained unusually low, indicating a disconnect between the price rally and actual network usage.

Daily active addresses on the Bitcoin network have fallen from over 1.1 million to under 850,000, and the Network Activity Index has also declined since mid-2023. This suggests that user engagement with the Bitcoin network has been waning, despite the cryptocurrency’s rising valuation. The decline in active addresses and transaction volumes points to fewer unique participants transacting on the blockchain, indicating diminished day-to-day use.

The disconnect between Bitcoin’s price performance and network activity suggests that the recent price momentum may not be grounded in widespread retail involvement or transactional activity. Instead, the rally appears to be driven by capital flows through exchanges and institutional channels, rather than grassroots participation. This off-chain influence leaves the rally structurally fragile, as it lacks the foundational support of increased network activity.

The decline in active network metrics, coupled with the low transaction counts across all fee tiers, further indicates reduced network load and minimal congestion. This trend suggests that the Bitcoin network may not be fully utilized, as fewer transactions take place on the blockchain itself. The rally may prove structurally unsound until core indicators of transaction throughput and address activity regain strength and until the network is used to grow capital supply rather than employ capital supply.

The current market dynamics raise questions about the composition of market participants today. As a peer-to-peer settlement network, Bitcoin may not be fully utilized because fewer transactions take place on the blockchain itself. The rally may prove structurally unsound until core indicators of transaction throughput and address activity regain strength and until the network is used to grow capital supply rather than employ capital supply.