A recent CryptoQuant Research postCryptoQuant’s Bitcoin Network Activity Index is at its lowest since February 20,24.
Bitcoin Network Activity Falls as Market Consolidates
CryptoQuant’s Bitcoin Network Activity Index indicates that the activity level has decreased by 15 percent since its peak of November 2024. The Index is at its lowest point in the last year as of February 5.
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A sharp decline in Bitcoin transactions is the primary cause of the network’s declining activity. Total daily transactions have fallen 53% since September 2024 when they reached an all time high (ATH), 734,000.
CryptoQuant claims that this decline is due to a decrease in tokens being minted on the Blockchain using the Runes Protocol. It explains that:
The RUNES protocol writes data on token transfers and mints using the daily total of OP RETURN code in Bitcoin transactions. The daily number of OP RETURN Codes spiked from 802K to 802K when the RUNES protocol was introduced in April 2024. Since then, however, only 10K OP-RETURN codes have been used.
The Runes Protocol for the uninitiated is a standard tokenization method that uses BTC. It allows fungible token creation on the BTC network directly without the use of complex smart contracts or off-chain data. The Runes Protocol aims to make tokenization more efficient and scaleable than other Bitcoin methods such as BRC-20 and Ordinals.
Bitcoin mempool activity provides further evidence that network activity has decreased. Total number of transactions awaiting confirmation in a Bitcoin Block has dropped by 99 percent, from 287,000 at the end of December 2024 down to only 3,000 on February 5, 2025. This is notable as the lowest mempool level since March 2022.
Is BTC Overvalued At Current Price?
Based on the analysis, it appears that Bitcoin’s current fair value is between $48,000 to $95,000. It follows that the current BTC price around $98,000 is likely overvalued.
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Another CryptoQuant Contributor argues Investors who are looking to dollar cost average their investments will find that the current Bitcoin rate is an excellent opportunity. Another analyst also agreed. suggests BTC is now in the “distribution phase” of the market cycle, based on its recent performance.
BTC’s long-term prospects remain positive despite short-term worries. Standard Chartered recently had a senior executive. predicted Bitcoin might reach $200,000 before the year 2025. BTC traded at $97.914 during the time of publication, down 0.1% from 24 hours prior.
Chart by TradingView.com, Featured Image from Unsplash
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Source: www.newsbtc.com
