Bitcoin (BTC) Price Growth May Be Coming Despite Lowest Blockchain Activity in a Year

One bitcoin (BTC) holder metric is pointing to price growth in the months ahead even as activity on the blockchain falls to its lowest in a year

One metric for bitcoin (BTC) holders suggests that price increases may be on the horizon in the coming months, despite activity on the blockchain falling to its lowest in a year, according to a CryptoQuant analysis this week.

The firm’s Bitcoin Network Activity Index has fallen 15% since reaching a record high in November 2024 and stood at 3,760 on Friday morning, the lowest since February 2024. The index aggregates metrics including active addresses, number of transactions, block size and fees to indicate growth or a decline in bitcoin usage.

A sharp decline in the number of transactions highlighted the drop in activity. Total daily transactions numbered 346,000 on Friday, down 53% from a high of 734,000.

Low network activity was also evident in the bitcoin mempool, which is a collection of all unconfirmed bitcoin transactions waiting to be included in a block by miners. Mempool volumes fell from a high of 287,000 in December to just 3,000 on Thursday, a decline of nearly 99% to levels not seen since March 2022.

According to CryptoQuant, the plunge may be attributed to a decreased utilization of Runes Protocol, a relatively new method for issuing fungible tokens directly on bitcoin.

“The decline in Bitcoin’s network activity can be largely attributed to the collapse in the use of the RUNES protocol to mint tokens on the Bitcoin network,” it stated. “This is evident in the total daily number of OP RETURN codes in Bitcoin transactions, which the RUNES protocol uses to write data about token mints and transfers on the network.”

“When the RUNES protocol launched in April 2024, the daily number of OP RETURN codes spiked to 802K. However, the number of OP RETURN code has declined since, with only 10K OP RETURN codes used,” the firm added.

Despite the drop in activity, it may not directly impact bitcoin price, which is likely to rise due to increasing demand from long-term accumulator addresses in recent weeks.

Bitcoin Permanent Holder demand is accelerating.

Historically, this signals strong confidence and often precedes rallies. pic.twitter.com/o2xPydbUhi

Such a spike is historically linked to a rally in BTC price and indicates the overall perception of the asset as an investment vehicle, or store of value. Permanent holders are addresses that accumulate BTC over time and never make spending transactions, indicating a long-term holding strategy that creates a lack of sell-side pressure.