Bitcoin On-Chain Metrics Crash To Bear Market Levels Despite Price Sitting Close To ATH

Bitcoin’s price action is still above the $100,000 threshold and within striking distance of its all-time high at $111,700, but its on-chain activity tells a completely different story. According to the latest report from on-chain analytics firm Glassnode, even though Bitcoin’s price is pushing to new heights, underlying blockchain metrics have slipped into territories more commonly associated with bear market phases.

Quiet Blockchain Activity Despite Price Strength

According to a report looking at various on-chain metrics from on-chain analytics company Glassnode, Bitcoin has mostly been highlighted by quiet blockchain activity despite its current price foray above $100,000. For example, daily transactions have now dropped to a range between 320,000 and 500,000, down from a peak of over 730,000 in 2024. This is a significant decrease in throughput for a network operating in a bullish price environment. 

The slowdown in daily Bitcoin transactions is mainly tied to a corresponding decline in non-monetary activity such as Inscriptions and Runes, which had previously contributed to transaction spikes. The actual transfers of value in monetary transactions have been relatively steady, but overall, the drop in network usage has created a noticeable divergence where previous rallies to all-time highs were usually accompanied by a rise in on-chain transactions.

Although transaction counts are falling, the Bitcoin blockchain is settling huge amounts of transactions on-chain. The daily volume average this cycle is around $7.5 billion and spiked as high as $16 billion during the initial rally above $100,000 in late 2024. However, the nature of these transactions has shifted from the hands of retail traders. The average volume per transaction is just above $36,000, meaning that large institutional players and high-net-worth individuals are now the primary users of the Bitcoin network.

Retail-size transactions (those under $100,000) have seen their relative share of the total volume go down massively. For example, transactions in the $0 to $1,000 range now represent less than 1% of total value transferred, down from about 4% at the start of this cycle. 

Fee Pressure Drops While Off-Chain Trading Dominates

Glassnode’s report also highlights how subdued the fee environment has become, even with Bitcoin trading around all-time high prices. Average miner revenue from transaction fees has dropped to just $558,000 per day. Although the decrease is partly due to technical improvements like SegWit and transaction batching, the massive fall in miner revenue indicates a notable drop in block-space demand and the overall reduction in the number of transactions. 

On the other hand, trading activity has shifted to off-chain venues, especially centralized exchanges. Spot volumes often exceed $10 billion per day, while futures markets dominate with average daily volume around $57 billion and peaks surpassing $120 billion. Options markets are also growing, now handling over $2.4 billion per day. Altogether, these off-chain platforms handle 7 to 16 times more volume than what is settled directly on the Bitcoin blockchain.

In conclusion, the Glassnode report shows the changing dynamics of Bitcoin’s ecosystem and how it is slowly leaning more toward large institutions than retail traders. At the time of writing, Bitcoin is trading at $103,470, down by 2% in the past 24 hours.

Featured image from Pexels, chart from TradingView