Bitcoin Network Activity Plummets: Should You Be Worried?

Bitcoin Network Activity Plummets: 7-Day Average Hits Yearly Lows

At 330,000, the 7-day moving average of Bitcoin network transactions has dropped to its lowest level in 12 months. Compared to the network’s previous peak of 730,000 transactions, this means a notable decline. This indicates a significant change in the way the Bitcoin network is being used since it represents an approximately 55% drop in network activity from peak levels. During times of heavy network activity prior to the end of 2024, transaction costs were higher. However, they have since stabilized around $500,000.

When looking at the history of Bitcoin-based protocols like Runes and Ordinals, which at first sparked network activity and speculative attention, the fall seems especially noticeable. These protocols, which work much like Ethereum’s NFTs and ERC-20 tokens, now make up about 1 percent of all transactions. For instance, Runes produced $60 million on its opening day, but in the subsequent 30 days, its fee revenue decreased to less than $20,000.

Transaction Decline Raises Concerns About Bitcoin’s Long-Term Fee Sustainability

Speculative trading activity has shifted onto other blockchain ecosystems due to market factors. In particular, networks like Solana have seen a notable increase in trader attention for memecoin trading. In a similar vein, Base has been the main base for AI agent tokens in recent months. This shift in activity shows that alternative networks are gaining market share and trading volumes, even if Bitcoin is still the biggest cryptocurrency by market capitalization.

The levels of transactions may start to cast doubt on the sustainability of fees and the use of the Bitcoin network. The network seems to be reverting to use cases that are mostly related to monetary transfers, as seen by decreased protocol activity and stable transaction costs. Whether new Bitcoin-based protocols can once again draw consistent user participation could determine how long this trend lasts.

For more up-to-date crypto news, you can follow Crypto Data Space.