Bitcoin (BTC) Transaction Count Plunges to 2023 Low

On-chain data shows the Bitcoin transaction count has plunged to the lowest level since October 2023. Here's what this could mean for BTC's price.

In the ever-evolving landscape of cryptocurrency, on-chain data serves as an invaluable guide, offering insights into the dynamics of investor behavior and market trends. Recently, CryptoQuant author IT Tech, known for their insightful analysis, took to X to highlight a significant drop in Bitcoin (BTC) transfer activity, an observation that has sparked discussion among crypto enthusiasts.

Chart of the Number of Transactions indicator shared by CryptoQuant author IT Tech on X

As pointed out by Tech, the relevant indicator here is the “Number of Transactions” from market intelligence platform IntoTheBlock, which measures, as its name suggests, the daily number of moves that addresses across the network are making.

Now, here is the chart shared by the analyst, that shows the trend in its value over the last few years:

As displayed in the above graph, the Number of Transactions has seen a large drop recently, suggesting that investors are making much fewer moves on the blockchain now.

Generally, a drop in network transaction activity is a sign that the traders are losing interest in the cryptocurrency. Any notable move in the price is only sustainable when a large number of investors are providing the fuel to support it, so it can be hard for BTC to mount up a rally when the Number of Transactions declines to a low level.

From the chart, it’s visible that the investors were making a high number of moves in the lead-up to the Bitcoin price rally beyond $100,000. But interestingly, the indicator plunged before the price peak arrived, implying that signs of the rally not having too much time left may have already been there from an on-chain perspective.

Recently, the Number of Transactions briefly crashed to a level that it hasn't touched since October 2023. Back then, the low transfer count didn’t last for too long and was in fact followed up by a burst of activity that accompanied a price rally.

It’s possible that something similar could happen this time as well, but one key difference between then and now is that the recent downturn in the indicator has been more prolonged. Naturally, if things are indeed going to be different this time, then a lasting lack of interest from the investors could be a bad sign for the bulls.

That said, one indicator that may provide for an argument against a shift away from a bull market is the Cycle Extreme shared by Axel Adler Jr, another CryptoQuant author.

“Cycle Extreme identifies the extreme points of price cycles,” explains the analyst. The indicator makes use of various popular Bitcoin on-chain indicators like the MVRV Ratio and SOPR to determine this.

Chart of the Cycle Extreme indicator shared by CryptoQuant author Axel Adler Jr on X

As is apparent from the graph, the indicator has often been reliable for pointing out inflection points in Bitcoin. “At the moment, this metric does not give any clear signals,” notes Adler Jr.

BTC Price

At the time of writing, Bitcoin is trading around $83,600, up almost 1% over the last week.