CryptoQuant: Bitcoin network activity is declining due to decreasing interest

The Bitcoin network has experienced a significant decline in activity, dropping to levels not seen in the last three years.

According to the on-chain analysis platform CryptoQuant, a general atmosphere of ‘disinterest’ is being felt in the cryptocurrency market, and there is a noticeable decline in Bitcoin transaction volumes.

In its latest Quicktake blog post, CryptoQuant noted that the number of active addresses on the Bitcoin network, which peaked in mid-March, has now dropped to 838,000.

By late August, this number had decreased further to 744,000, marking the lowest daily figure recorded since 2021.

Bitcoin active addresses reach a new low

According to CryptoQuant writer Gaah, the total number of active addresses on the Bitcoin network has seen a new decline as we enter 2024, dropping to levels where Bitcoin was trading around $45,000 approximately three years ago.

Gaah pointed out that the decline in active addresses indicates a decrease in network activity, which means fewer transactions are occurring, potentially signaling a waning interest in the network.

This drop in Bitcoin’s active address count is happening amid a broader period of disappointment in the cryptocurrency market, as Bitcoin’s price struggles to determine a clear direction.

Active addresses on the $BTC network hit new lows in 2024

“Active addresses on the #Bitcoin network hit new lows in 2024, reaching the same level as 3 years ago, when the price of BTC was quoted at around $45,000.” – By @gaah_im

Read more 👇https://t.co/XmdzMuYEgl pic.twitter.com/QQFZQRzJkG

— CryptoQuant.com (@cryptoquant_com) September 4, 2024

Metrics such as the Puell Multiple, which compares the value of newly mined Bitcoin with the 365-day moving average, are hovering in a neutral zone.

According to CryptoQuant, these indicators suggest that a buying opportunity could present itself in the near future.

Gaah stated that the combination of declining activity and prices could offer an opportunity for some investors to buy Bitcoin, anticipating a future rise.

However, if investors perceive this situation as a sign of declining interest in the asset, prices could drop further, and new support levels might form.

This situation has caught the attention of market observers. Checkmate, the creator of the on-chain analytics platform Checkonchain, described Bitcoin’s recent price movements as ‘sharpening,’ which refers to a combination of consolidation within a narrow range and irregular price fluctuations.

In a recent post on the X platform, Checkmate noted that the increasing volatility signals the destabilization of the price range, indicating that the market might be preparing for a significant move.

According to historical data, despite the low activity, Bitcoin has not yet experienced the sharp corrections seen in previous bull markets.

Bitcoin ETFs see outflows

Spot Bitcoin ETFs experienced net outflows for six consecutive days, with a total outflow of $37.29 million from these products on Wednesday.

Grayscale’s GBTC, the second-largest Bitcoin ETF, recorded the largest loss with a $34.25 million outflow, while Fidelity’s FBTC and VanEck’s HODL also saw significant withdrawals.

Ethereum ETFs in the U.S. witnessed similar outflows. Grayscale Ethereum Trust (ETHE) recorded a net outflow of $40.63 million on Wednesday, while Grayscale Ethereum Mini Trust (ETH) reported an inflow of $3.12 million. The total trading volume of the nine Ethereum ETFs dropped from $163.5 million the previous day to $145.86 million.

Last week, a total of $305 million was reported to have been withdrawn from digital asset investment products. The primary reason for these withdrawals is attributed to stronger-than-expected economic data from the U.S., which seems to reduce the likelihood of a 50 basis point interest rate cut by the Federal Reserve (Fed).