Bitcoin On-Chain Transaction Volume Hits 18-Month Low

The decline of Runes and Ordinals is primarily due to the following reasons:

Market Cycles and Macroeconomic Environment

• Cryptocurrency Market Enters Seasonal Lull: The overall cryptocurrency market exhibits certain cyclical and seasonal characteristics, and it may currently be in a relatively inactive period, leading to decreased trading willingness among investors and a drop in Bitcoin on-chain transaction volume.

• Macroeconomic and Regulatory Uncertainty: Uncertainties in the global macroeconomic landscape and unclear regulatory attitudes towards cryptocurrencies in various countries have made investors more cautious, reducing Bitcoin trading activity.

Technology and Ecological Development

• Natural Reversion After the Hype: The speculative frenzy surrounding Bitcoin-native protocols such as Runes and Ordinals is gradually waning, with traders shifting their interest towards other blockchain ecosystems like Ethereum and Solana, resulting in a significant decrease in Bitcoin on-chain transactions related to these protocols.

• Transaction Fees and Miner Incentive Issues: Since the beginning of the year, Bitcoin transaction fees have remained below $1.50, indicating minimal competition for block space and a return to traditional transaction purposes. Some users have attempted to initiate transactions with fees below 1 sat/vB, and the mining pool MARA has launched the “Slipstream” channel to handle ultra-low fee transactions, sparking debates among Bitcoin developers about network standards and censorship resistance, which has also affected transaction activity to some extent.

Changes in Investor Behavior

• Increased Trend of Holding Coins Long-Term: Since April 2024, an average of 566 BTC has been added to the ten-year holding queue daily, exceeding the daily new supply of 450 coins from miners. The proportion of coins held for over ten years accounts for 17% of the total circulating supply, with a large amount of Bitcoin locked by long-term holders, reducing market circulation and trading frequency.

• Cautious Market Sentiment: The implied volatility of BTC in the short term has dropped below 40%, and the premium on put options reflects a strong cautious sentiment in the market. In the face of increasing uncertainty, investors are more inclined to hold their coins and wait rather than engage in frequent trading.