Bitcoin network activity has hit a one-year low, with a significant decline in the number of transactions and mempool volumes. However, despite the drop in activity, metrics point to potential bullish moves in the near future, according to a recent analysis by CryptoQuant.
The decrease in Bitcoin’s network activity can be largely attributed to the reduced usage of the Runes Protocol, a new method for issuing fungible tokens directly on the Bitcoin network. The daily number of OP_RETURN codes, which the Runes Protocol uses to record token mints and transfers, has plummeted from a high of 802,000 in April 2024 to just 10,000 currently.
While the drop in activity may seem concerning, it may not directly impact Bitcoin’s price. In fact, CryptoQuant suggests that the increasing demand from long-term accumulator addresses in recent weeks could signal a potential rally in the BTC price. Historically, such spikes in demand from permanent holders, who accumulate BTC over time without engaging in spending transactions, have been associated with price growth and indicate a perception of Bitcoin as a store of value.
The rise in long-term holder demand creates a lack of sell-side pressure, which could help support and drive Bitcoin’s price in the coming months. As the market continues to evolve and adapt to new protocols and trends, it is crucial for investors to keep a close eye on key metrics and indicators to make informed decisions.
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Tags: Bitcoin, network activity, long-term holders, bullish sentiment, CryptoQuant