Bitcoin Network Activity Drops 15%, Hits Lowest Level in a Year

Key Takeaways

• CryptoQuant reports Bitcoin network activity has declined by 15% since November 2024’s record high, reaching its lowest level since February 2024.
• Daily Bitcoin transactions have dropped by 53%, from an all-time high of 734K in September 2024 to 346K today.
• Bitcoin appears overvalued, currently priced at $99K, while its fair value based on network activity stands between $48K and $95K.

The Bitcoin network is experiencing a sharp decline in activity, according to CryptoQuant’s Bitcoin Network Activity Index.

In a research note shared with CryptoNews on DATE, CryptoQuant noted that the index has dropped 15% since peaking in November 2024, and is now sitting at 3,760, its lowest level in a year.

Collapse of the RUNES Protocol Triggers Decline

According to CryptoQuant, a key driver in this decline is a 53% drop in daily Bitcoin transactions, which have fallen from 734K in September 2024 to just 346K today.

This decrease is being largely attributed to the collapse of the RUNES protocol, a system used to mint tokens on Bitcoin’s blockchain.

When RUNES launched in April 2024, OP RETURN codes—used to store data about token mints—spiked to 802K. However, usage has since plummeted, with only 10K OP RETURN codes appearing in transactions now.

CryptoQuant noted that the Bitcoin mempool, which holds unconfirmed transactions, reflects this downturn. The number of pending transactions has dropped 99%, from 287K in December 2024 to just 3K today, marking its emptiest state since March 2022.

From a valuation perspective, Bitcoin appears overvalued at $99K, considering its fair value based on network activity ranges between $48K and $95K (Metcalfe Valuation Bands). If network activity does not pick up, Bitcoin’s price could face downward pressure.

Frequently Asked Questions (FAQs): A Deeper Exploration

What is CryptoQuant’s Bitcoin Network Activity Index?

CryptoQuant’s Bitcoin Network Activity Index is a metric that tracks overall activity on the Bitcoin network. It considers factors such as transaction volume, active addresses, and mempool congestion to assess how frequently Bitcoin is being used. A decline in this index suggests reduced engagement and demand for on-chain transactions.

How does the mempool reflect Bitcoin’s network health?

The mempool is a waiting area for unconfirmed transactions before they are added to a block. When it is full, it indicates high network demand, leading to higher fees and longer transaction times. Currently, the mempool is nearly empty, suggesting that demand for block space has declined, reinforcing the drop in activity.

What does Bitcoin’s fair value range of $48K-$95K mean?

The Metcalfe Valuation Bands use network activity to estimate Bitcoin’s fair value. When activity is high, the price tends to trade within these bands.