Bitcoin Network Activity Plummets to Multi-Year Lows
The Bitcoin network is currently facing a significant contraction, with activity metrics receding to levels unseen in over a year. According to a recent report by CryptoQuant, the network activity index has fallen to roughly 3,760, representing a decline of approximately 15% from its peak recorded in November. This index, a composite of measures including block size, active addresses, and transaction throughput, has now dipped below its 365-day moving average for the first time since mid-2021.
Significant Drop in Key Network Indicators
A detailed examination of the Bitcoin network reveals a considerable decrease across various operational measures. Data indicates that both the volume of active addresses and the number of daily transactions have experienced substantial double-digit percentage decreases. Specifically, daily transactions have decreased by 53% from a high of 734,000 in September to about 346,000 currently. Similarly, the count of active addresses has fallen by approximately 20%, from around 1.14 million to 942,000 over the past year.
| Metric | Previous Value | Current Value | Percentage Change |
|---|---|---|---|
| Daily Transactions | 734,000 | 346,000 | -53% |
| Active Addresses | 1.14 million | 942,000 | -20% |
| Mempool Transactions | 287,000 | 3,000 | -99% |
Impact on Bitcoin Miners’ Earnings
The reduction in network activity has directly impacted Bitcoin miners. This downturn has led to a sharp reduction in total daily transaction fees, which have dropped from a recent high of $4.7 million in late October to roughly $593,000. As transaction fees now represent only about 1.8% of the total revenue for miners, their profitability has been adversely affected.
Mempool Empties, Raising Valuation Questions
Another telling sign of reduced network engagement is the near-empty state of the Bitcoin mempool. The number of unconfirmed transactions pending addition to a block has plummeted from 287,000 to around 3,000, indicating an almost complete clearing of the mempool—a condition not seen since the bear market of early 2022.
These developments have fueled growing concerns regarding Bitcoin’s current market valuation. With Bitcoin trading around $97,000, several valuation models suggest it may be overvalued, with some metrics proposing a fair value range between $48,000 and $95,000.
In conclusion, the widespread decline in network utilization and miner revenue, combined with a significantly light mempool, casts doubt on the long-term viability of current price levels amid diminishing activity.
Maxwell Reed is the first editor of Cryptovista360. He loves technology and finance, which led him to crypto. With a background in computer science and journalism, he simplifies digital currency complexities with storytelling and humor. Maxwell began following crypto early, staying updated with blockchain trends. He enjoys coffee, exploring tech, and discussing finance’s future. His motto: “Stay curious and keep learning.” Enjoy the journey with us!