Bitcoin has seen a rally toward the $81,000 level, but on-chain data shows the surge has failed to attract investor attention, with network activity remaining low.
Bitcoin On-Chain Activity Has Dropped To 2-Year Lows
According to data from on-chain analytics firm Santiment, the Bitcoin blockchain has witnessed a drop in indicators related to on-chain activity. The metrics of relevance here are the Daily Active Addresses and Network Growth.
First, the Daily Active Addresses measures the total number of wallets that are coming online on the network every day. An address is said to come “online” on the network when it participates in some kind of transaction activity, whether as a sender or receiver. As such, the Daily Active Addresses basically tells us about the user activity on the network.
The other indicator of interest here, the Network Growth, deals with activity that’s specifically coming from new users; it measures the total number of addresses coming online on the blockchain for the first time.
Now, here is the chart shared by Santiment that shows how these two metrics have changed for Bitcoin over the past year and a half:
As displayed in the above graph, both the Bitcoin Daily Active Addresses and Network Growth have declined over the last few months. While the earlier decline made sense in the context of the bearish market shift, the latest continuation of the downtrend has interestingly arrived despite a price surge in the cryptocurrency.
Currently, there are 531,000 addresses participating in network transaction activity and 203,000 new addresses popping up daily. This is the lowest that both counts have been in about two years.
Generally, notable price rallies tend to attract network participation and adoption as traders find such phases to be exciting. Clearly, though, the latest one hasn’t been able to do that, at least not so far. Santiment noted:
Instead, the price is climbing on relatively thin participation, meaning a smaller group of players is responsible for pushing the market higher, rather than a broad wave of new and returning users flooding in.
Historically, price surges that have failed to gather enough attention have been likely to fizzle out. Since the latest rally isn’t currently being backed by mass user participation, its foundation may be shaky.
That said, the current low network activity could also actually act like a contrarian signal. As the analytics firm explained:
Paradoxically, 2-year lows in network activity can actually signal that Bitcoin is coiled for a much bigger move upward. Activity bottoms often mark the end of apathy, not the continuation of it.
BTC Price
At the time of writing, Bitcoin is trading around $81,250, up 7% over the last week.
