While the downward trend continues in Bitcoin, long-term BTC holders continue to accumulate! Here are the details.

According to a new analysis by CryptoQuant, Bitcoin's on-chain activity has dropped to the lowest level of the year, but the increasing demand from long-term holders may indicate a rising momentum in the coming months.

Bitcoin Network Activity Hits Lowest Level in 1 Year, But Long-Term Hodlers Signal Bullish

The company's Bitcoin Network Activity Index fell 15% since its peak in November 2024, reaching 3,760 points, the lowest level since February 2024. This index tracks active addresses, transaction counts, block sizes, and fees to measure overall Bitcoin usage.

A significant driving force of the low network activity is the sharp drop in Bitcoin transactions.

• Daily transactions fell by 53% from the all-time high of 734,000 recorded in September to 346,000. The Bitcoin mempool, a queue of unconfirmed transactions, has dropped from 287,000 levels in December to 3,000 as of today, indicating levels not seen since March 2022.

CryptoQuant attributed this slowdown primarily to the decrease in the usage of the Runes Protocol, which was introduced as a method to issue interchangeable tokens directly on Bitcoin in April 2024.

*During its peak, the protocol was processing 802,000 OP_RETURN code transactions per day, but now this number has dropped to just 10,000. CryptoQuant stated, "The decrease in Bitcoin's network activity can mostly be explained by the collapse in usage of the Runes Protocol."

Signs of Rise from Long-Term Holders

Despite the slowdown in network usage, the price outlook for Bitcoin continues to be positive due to increasing demand from long-term accumulator addresses.

• These addresses continuously accumulate BTC without selling, reducing the existing supply and alleviating selling pressure.
• Historically, the increase in long-term holders has preceded Bitcoin rallies and strengthened BTC's status as a store of value.

Although the decrease in activity on the chain raises concerns, the increase in long-term accumulation indicates that Bitcoin may be preparing for its next bullish phase.