A recent report by CryptoQuant revealed a significant decline in Bitcoin network activity, with performance indicators hitting their lowest levels over the past year. The report indicated a 17% decline in the number of active addresses, transactions, and block size compared to the peak recorded by the network in November 2024, reflecting a clear weakness in demand for Bitcoin.
According to the report, the activity indicator on the network reached 3658, a number lower than its annual moving average, indicating a downward trend similar to what the market witnessed after China banned Bitcoin mining in 2021. This decline reflects the decline in investor and miner participation in the network, which may affect price stability in the coming period.
One of the most prominent indicators of this decline is the decline in Bitcoin exchange-traded funds (ETF) purchases. In November 2024, these funds were buying about 18,000 Bitcoin per day, but this number has declined sharply to less than 1000 Bitcoin per day at the present time. This slowdown in demand from institutional investors means that the market is missing the drivers that support price growth.
In addition, liquidity flow from stablecoins has been declining significantly, with USDT’s market cap expansion down 92% since last December. This is a crucial indicator, as stablecoins are typically used to buy Bitcoin, meaning that the decline in their flow reflects overall market weakness.
If the current weak demand and liquidity conditions continue without improvement, Bitcoin could head towards the $86,000 level, which is the lower end of the expected trading range according to current analysis.
