Bitcoin has been fiercely bullish in recent months. The world’s largest cryptocurrency by market cap recently peaked above $50,000, extending an impressive streak of gains that have driven the crypto market closer towards May highs.
Nonetheless, on-chain data shows that the bitcoin network has not been processing many transactions per second even with the parabolic price upswing.
What The Decreasing Bitcoin Transactions Reveal About The State Of The Network
Researchers from Blockchain analytics platform Glassnode found that entity-adjusted bitcoin transactions have not responded positively to the ongoing bullish momentum and are at “historically low levels” — with the network registering 175,000-200,000 daily transactions.
Moreover, bitcoin transaction volumes are also depressingly low as the network posted approximately $18.8 billion in daily volume. This is 50% less than what it was during BTC’s May bull run, the report released by Glassnode on Monday notes. Transaction volume is a strong fundamental sign of growth. It suggests that BTC is being used beyond mere speculation.
The analytics resource also indicated that this week there was a rise in older coins that have been dormant for around 20 weeks beginning to be dumped. For crypto novices, this might suggest that long-term holders are selling as the prices stall.
However, Glassnode has pointed to another signal that favors the bulls. While the older coins are increasingly being spent, the number of BTC in the wallets of HODLers has surged. This week, the long-term holder supply touched a new record high of 12.69 million BTC.
This implies that bitcoin investors are not leaving en masse as the spending is quite small in volume. This completely makes sense given the top crypto’s overall low transaction volumes.
In truth, Glassnode says old hands spending their bitcoin holdings does not translate to a mass exit. It’s just investors de-risking their positions and taking some profits when the chance presents itself.