Recent data from CryptoQuant reveals that Bitcoin network activity has slumped to its lowest level in a year. The Bitcoin Network Activity Index currently stands at 3,760, a 15% decline from its peak in November 2024. This downturn is primarily attributed to a sharp drop in the number of transactions on the network, falling by 53% from its all-time high in September 2024.
The decline in network activity is largely driven by a decrease in the use of the Runes Protocol for minting tokens on the Bitcoin blockchain. The daily number of OP_RETURN codes, used by the Runes Protocol to write data about token mints and transfers, has plummeted from a peak of 802,000 in April 2024 to just 10,000 currently.
Furthermore, the Bitcoin mempool traffic has also seen a significant reduction, with the total number of pending transactions waiting to be confirmed in a block falling by 99% since December 2024. This is the lowest level of mempool traffic observed since March 2022.
Based on the current network activity, CryptoQuant suggests that Bitcoin’s fair value lies between $48,000 and $95,000, implying that BTC may be overvalued at its current market price of around $98,000. However, some analysts argue that the current price presents a strong buying opportunity for investors looking to dollar-cost average their holdings, while others suggest that BTC is in the distribution phase of the market cycle.
Despite the short-term concerns, the long-term outlook for Bitcoin remains bullish, with some executives predicting BTC could reach $200,000 by the end of 2025. As the market continues to evolve, it will be crucial to monitor network activity and other key indicators to gauge the health and potential of the world’s largest cryptocurrency.
Tags: Bitcoin, BTC, network activity, Runes Protocol, mempool, overvaluation, market cycle
Source: https://www.newsbtc.com/bitcoin-news/bitcoin-network-activity-slumps-to-one-year-low-is-btc-overpriced/