Bitcoin, on-chain transactions are hollowing out = Glassnode

## The “Ghost Town” of on-chain transactions

On-chain analytics firm Glassnode pointed out in its weekly report released on the 19th that as the price of Bitcoin (BTC) surges, the divergence from network activity has become significant. This cycle is markedly different from past cycles, revealing that investors’ trading activities are shifting from the on-chain market to the off-chain market.

In this report titled “On-Chain Ghost Town,” Glassnode examined the number of transactions on the Bitcoin network to uncover the reasons behind the “abnormally quiet” state of network transactions, while the price of Bitcoin remains at a high level above $100,000.

In 2023~2024, the trading volume increased, recording a maximum of 734,000 transactions per day, but in 2025, the number of transactions decreased to 320,000~500,000 per day, a significant decline from the peak. By type of transaction, monetary transactions (transfers of value) have remained stable over the past year. On the other hand, non-monetary transactions, such as data embedding and token issuance, such as Inscriptions and Runes, surged in July~December 2024, leading to an increase in the total number of transactions, but decreased significantly after 2025, which had a significant impact on the overall reduction in the number of transactions.

Although the number of Bitcoin transactions has decreased, the network’s transaction volume still maintains a historically high level. On average, transactions amounting to $7.5 billion (approximately ¥1.089 trillion) are conducted daily, and when the price of Bitcoin surpassed $100,000 in November 2024, a peak of $16 billion (approximately ¥2.3241 trillion) was recorded.

Looking at the breakdown of transactions, trades exceeding $100,000 accounted for 66% of the network transaction volume in November 2022, but have now increased to 89%. This suggests that the on-chain activities of large investors and institutional investors are becoming dominant.

On the other hand, trading volumes under $100,000 peaked at 34% market share in December 2022 and have now declined significantly to 11%. By trading volume, the share of less than $1,000 fell from 3.9% to 0.9%, $1,000 to $10,000 fell from 8.4% to 2.1%, and $10,000 ~ $100,000 fell from 21.4% to 7.9%.

In the past cycles, during the price surges of Bitcoin, fees also skyrocketed; however, currently, due to low demand for block space, the upward pressure on fees is suppressed, indicating that on-chain activity is not active.

increase in off-chain transaction volume

In contrast, off-chain activities such as spot trading and derivatives trading on centralized exchanges (CEX) have become very active.

Trading activity in CEX has remained robust over the past year, with an average daily spot trading volume of $10 billion (approximately ¥1.4534 trillion), peaking at $23 billion (approximately ¥3.3428 trillion) in November 2024. Notably, this spot trading volume is on par with the on-chain trading volume.

Looking at the derivatives market, the trading volume of futures is overwhelmingly larger than other trading volumes, significantly increasing in this cycle. It reached an average of 57 billion dollars (approximately 8 trillion 2,843 billion yen) per day, and in November 2024, it peaked at an astounding 122 billion dollars (approximately 17 trillion 7,313 billion yen).

The trading volume of options also significantly increased during this cycle, with a daily average of $2.4 billion (approximately ¥348.8 billion) and a peak of $5 billion (approximately ¥726.7 billion).

When comparing off-chain trading volume (spot + futures + options) with on-chain trading volume, it is clear that the off-chain trading volume is always 7 to 16 times that of the on-chain trading volume, indicating that the center of activity has shifted to off-chain.

Such structural changes may make it difficult to grasp the overall picture of market activities with traditional indicators, and could influence the interpretation of network indicators. The on-chain market continues to play an important role as the foundation of the Bitcoin ecosystem and capital flows, while deposits and withdrawals to and from CEX function as a critical link connecting off-chain and on-chain.

accumulation of leverage

As the importance of derivatives in the Bitcoin market increases, the report examined the open interest in futures and options contracts to assess the accumulation of leverage.

Both markets have seen a significant increase in open interest over the past few years, with futures open interest rising from $7.7 billion (approximately ¥1.1 trillion) to $52.8 billion (approximately ¥7.6 trillion), while options surged from $3.2 billion (approximately ¥465.1 billion) to $43.4 billion (approximately ¥6.3 trillion).

The total amount of outstanding derivative positions reached a peak of $114 billion (approximately ¥16.5686 trillion) and currently remains at a high level of about $96.2 billion (approximately ¥13.9815 trillion).

The fluctuations in open interest in 2023 were mild, but the introduction of a Bitcoin spot ETF in the United States in January 2024 has led to increased volatility. The report noted that this rise in volatility is mainly indicative of the market as a whole transitioning from a predominantly spot trading-centered structure to one that is more focused on derivatives trading.

Such changes are feared to increase chain-like liquidation risks and lead to the formation of a more unstable and reflexive market environment. However, since the collapse of FTX, the collateral structure supporting open positions has also changed. From 2018 to 2021, collateral in cryptocurrency was preferred, but now, it has become mainstream to use stablecoins as collateral for margin, which reportedly accounts for the majority of the collateral for open positions.

The report concluded that the improvement in the composition of backed collateral highlights the maturation of the cryptocurrency derivatives market and a transition to more stable risk management practices.