Key Points
- Despite Bitcoin’s price surge to $97K, its on-chain activity remains notably low.
- Six key reasons explain the stagnant on-chain activity, including external price drivers and shift in usage to other networks.
Bitcoin, despite its recent price rally to $97,000, has been experiencing a notable weakness in its on-chain activity.
The key metrics of the network, namely the number of Active Addresses and transactions, are not reflecting the market’s enthusiasm.
Why is Bitcoin’s On-Chain Activity Lagging?
According to an analysis by Alphractal, there are six main reasons for this.
Firstly, the current price surge is driven by external factors such as capital inflows through Spot ETFs and institutional interest, rather than actual blockchain usage.
Secondly, the cryptocurrency’s price volatility has been unusually low, reducing the incentives for investors to act, thus resulting in fewer on-chain transactions.
Other Factors Affecting Bitcoin’s On-Chain Activity
Another reason is the artificial Exchange Volumes, where some volumes are likely inflated, creating a misleading sense of activity.
Additionally, usage has shifted to other networks such as Ethereum (ETH), Solana (SOL), and Base, which are attracting DeFi, staking, and memecoin activity.
Moreover, Bitcoin’s appeal as a practical payment network has taken a backseat, with prices growing faster than the network activity.
Lastly, the adoption of second layers like Lightning Network is growing faster, shifting more transactions off-chain and making Mainnet activity appear lower.
This shift suggests that Bitcoin is increasingly being treated as a macro financial asset, not as a decentralized currency built for everyday use.
Unless on-chain demand picks up, Bitcoin’s price growth could face structural limits.
