Despite Bitcoin reaching new highs in price in recent months, recently hitting $97,000, its network has not shown any corresponding signs of excitement.
On-chain activity remains low, with key metrics like active addresses and transaction volumes failing to reflect market excitement.
Notably, the number of active addresses has struggled to maintain the threshold of 1,000, only breaking this barrier three times in the past few months—which is a signal worth considering for investors.
As of the time of writing, the number of active Bitcoin addresses hovers around 958,740—considering the scale and momentum of the recent rise, this number is quite moderate. This raises a major question: why does the network 'contradict' market value?
Six reasons for the stagnation of Bitcoin's on-chain activity
First, the current Bitcoin price is largely driven by external factors rather than actual usage demand on the blockchain. The market is influenced by an influx of institutional funds and spot ETFs rather than actual user participation in the network. Big companies like Strategy, Metaplanet, and BlackRock continue to accumulate substantial amounts through these financial products, creating price momentum, but on-chain activity has not increased correspondingly.
Secondly, Bitcoin's price volatility is exceptionally low. After several weeks of trading within a narrow range of $92,000 to $95,000, the current price trend lacks a strong enough breakout to trigger active trading or wallet transfers.
Against this backdrop, many investors choose to wait and see, leading to a significant decline in on-chain transaction volumes.
Third, there is a phenomenon of 'expansion' in market trading volume. Some recorded volumes may not accurately reflect actual network activity, leading to a misperception of the ecosystem's health. This 'expanded' trading volume creates an illusion of excitement, while actual blockchain usage remains quite moderate.
Fourth, real-world usage has shifted to other blockchains. Platforms like Ethereum, Solana, and Base are attracting an increasing amount of DeFi activity, staking, and memecoin speculation. This has led to a clear trend: users are looking for ecosystems with richer features and higher traffic to conduct on-chain activities.
For example, the Solana chain has become dominant in memecoins, while Ethereum still leads in the staking sector. As usage shifts to other chains, Bitcoin is becoming increasingly stagnant.
Fifth, Bitcoin's role as a practical payment system is diminishing. The initial appeal of Bitcoin as a peer-to-peer transaction medium is slowly giving way to other more flexible and faster platforms. The imbalance created by usage failing to keep pace with rising prices raises concerns in the market about the sustainability of the upward trend. In the long run, if prices cannot reflect actual demand, the market may have to adjust.
Sixth, the rapid development of second-layer (L2) solutions like the Lightning Network also helps to 'offload' the main network. As more transactions move to L2 networks with faster processing speeds and lower fees, activity on the main network appears to slow down. While this is a technically positive development, it also means that traditional on-chain metrics can no longer fully reflect the network's health.
In short, the continuous rise in Bitcoin prices does not necessarily mean that blockchain usage is also increasing. We are witnessing a clear shift: Bitcoin is increasingly seen as a reserve asset, while other blockchains are where the real action in the crypto ecosystem takes place.
What does this mean for BTC?
Ultimately, price does not tell the whole story. While Bitcoin shows impressive strength on price charts, this does not mean that network activity is also increasing accordingly. In fact, BTC's excellent performance has occurred amid relatively sluggish on-chain metrics—this is a noteworthy paradox.
This indicates a significant shift in the market's perception of Bitcoin: from a decentralized currency for everyday transactions to a macro-financial asset as a store of value.
Traditionally, Bitcoin's sustained growth has been closely linked to the expansion of its user base, especially among retail users. This practice has been the foundation of past strong bull market cycles.
However, current cash flow mainly comes from large financial institutions, with retail investors relatively absent, making growth momentum potentially more fragile. If on-chain activity cannot recover, the BTC price will face structural constraints as market value is no longer supported by real-world usage.
