Bitcoin Network Activity Hits 1-Year Low, but Long-Term Holders Signal Bullish Outlook
A sharp decline in blockchain activity has been marked by a significant drop in the number of transactions, but rising demand from long-term holders could provide support for Bitcoin’s price, according to a recent CryptoQuant analysis.
Despite Bitcoin’s network usage reaching its lowest level in a year, one key holder metric suggests that price growth may be on the horizon. CryptoQuant’s Bitcoin Network Activity Index has fallen 15% since its record high in November 2024, now sitting at 3,760—its lowest reading since February 2024. This index measures key on-chain metrics such as active addresses, transaction count, block size, and fees to assess Bitcoin network growth or decline.
The decline in activity is evident in Bitcoin’s daily transactions, which have dropped to 346,000—a sharp 53% decline from the all-time high of 734,000 transactions.
Further confirmation of lower network usage can be seen in Bitcoin’s mempool, which represents unconfirmed transactions waiting to be processed by miners. Mempool volumes have plunged from a December peak of 287,000 to just 3,000 as of Thursday, a staggering 99% decline—the lowest level since March 2022.
CryptoQuant attributed this decline to the decreased use of the Runes Protocol, a system introduced in April 2024 that enabled the issuance of fungible tokens directly on the Bitcoin network.
“The collapse in Bitcoin’s network activity can be largely explained by the sharp decline in the use of the RUNES protocol,” CryptoQuant stated. The analysis highlighted a drop in OP RETURN codes—a Bitcoin transaction feature used by Runes to record token mints and transfers. At its peak, Runes activity pushed OP RETURN usage to 802,000 daily transactions, but that number has since plunged to just 10,000.
However, despite the decline in on-chain activity, Bitcoin’s price remains supported by strong demand from long-term holders, which has increased in recent weeks. Historically, an uptick in accumulation by these addresses—known as permanent holders—has been associated with Bitcoin price rallies.
Permanent holders continuously accumulate BTC without selling, reducing sell-side pressure and reinforcing Bitcoin’s role as a store of value. This pattern suggests that Bitcoin’s price may remain resilient and could see growth in the months ahead.
