Since hitting a record high in mid-March, bitcoin prices have been fluctuating in a consolidation range. This depressed price action has been a source of concern for most investors, especially when the premier cryptocurrency recently lost support at the $60,000 level.
Interestingly, price is not the only Bitcoin indicator that has cooled since the first quarter of this year. Data analytics firm Santiment revealed that on-chain activity on the Bitcoin network has also slowed over the past few months.
How does historically low on-chain activity affect BTC prices
In a new post on the X platform, Santiment revealed that on-chain activity on the Bitcoin network is approaching historic lows. This finding is based on a clear downward trend in various metrics, notably volume, daily active addresses, and the number of whale trades.
According to data from the Blockchain Intelligence platform, investors have been trading less with BTC since the premier cryptocurrency hit a record high. As a result, Bitcoin's on-chain activity has fallen to its lowest level since 2019.
By breaking down these metrics, Santiment found that the volume of transactions on Vanguard's blockchain is dropping to its lowest level in the past decade. The data analytics firm defines trading volume as a metric that tracks the total number of tokens traded for a given asset over a time frame.
In addition, Santiment mentioned in its report that the number of daily active addresses, which measures the number of different addresses participating in BTC trading on any given day, has reached its lowest point since January 2019.
The blockchain intelligence platform also revealed that whale activity on the Bitcoin network has slowed down. According to Santiment, the number of whale transactions (over $100,000) has fallen to its lowest point since late 2018.
On the surface, the decline in on-chain activity seems to be a worrying trend and a symptom of the precarious health of the market. However, Santiment noted that this decline may not necessarily be related to the upcoming BTC price decline - as seen in the past few weeks.
The analytics firm said the drop in on-chain activity is more indicative of "group fear and indecision" among traders. Ultimately, this highlights the link between on-chain activity and bitcoin market sentiment.
Bitcoin Prices at a glance
According to CoinGecko, the price of Bitcoin is just above $60,770, and the price has fallen only 0.2% in the past day.
https://www.newsbtc.com/news/bitcoin/bitcoin-on-chain-activity-nearing-historic-lows-what-this-means-for-btc-price/