Bitcoin Network Activity Plunges to 1-Year Low, but Long-Term Holders Indicate Bullish Momentum

Bitcoin’s blockchain activity has hit its lowest level in a year, with a sharp drop in transactions and mempool activity. However, rising accumulation by long-term investors suggests a bullish outlook for the cryptocurrency, according to CryptoQuant’s latest analysis.

CryptoQuant’s Bitcoin Network Activity Index, which measures key metrics such as active addresses, transaction count, block size, and fees, has fallen 15% from its peak in November 2024. As of Friday, the index sits at 3,760, its lowest level since February 2024.

A steep decline in daily Bitcoin transactions has been a major contributor to this drop. Transactions have fallen to 346,000, down 53% from their all-time high of 734,000.

Bitcoin’s mempool activity has also collapsed, with unconfirmed transactions dropping from 287,000 in December to just 3,000 as of Thursday—a 99% decline, marking the lowest level since March 2022.

According to CryptoQuant, the decline is primarily linked to reduced usage of the Runes Protocol, a system introduced in April 2024 that allowed fungible tokens to be issued on the Bitcoin network.

“The sharp drop in Bitcoin’s network activity is largely due to the decreased use of the Runes Protocol,” CryptoQuant stated. The report highlighted a collapse in OP RETURN codes, which Runes used to store transaction data. At its peak, OP RETURN codes surged to 802,000 daily, but that number has now plummeted to just 10,000.

Despite this slowdown in activity, Bitcoin’s price outlook remains optimistic due to increasing accumulation by long-term holders. Recent data shows a rise in accumulator addresses—wallets that continue acquiring BTC without selling—which has historically signaled a bullish trend.

With long-term investors reducing sell-side pressure, Bitcoin’s role as a store of value remains strong, positioning the asset for potential price appreciation in the coming months.