Bitcoin (BTC) started the New Year with a strong price rally, breaking through the $70,000 mark for the first time in history. The cryptocurrency network also saw significant activity. Over the past two months, Bitcoin has not shown the most impressive results. The price of BTC has dropped, which is why activity on the network of the first cryptocurrency by capitalization has also decreased.
Bitcoin blockchain activity falls to five-year low
According to analytics platform Santiment, activity on the Bitcoin blockchain has reached its lowest level since 2019. Trader interest is fading, which contrasts with the previous excitement caused by the launch of the Runes protocol in April this year.
Experts believe that the decline in activity on the BTC network may reflect widespread feelings of fear and uncertainty among members of the crypto community. Such sentiment often coincides with periods of increased market volatility. However, over the past month, the price of Bitcoin dropped by 6.9%. According to coinmarketcap, at the time of writing, the cryptocurrency is trading at $63,149.
“This does not necessarily mean a further decline in BTC, but rather signals fear and indecision among traders,” Santiment analysts emphasized.
Why did the BTC activity drop?
The decrease in activity in the blockchain of the leading cryptocurrency may also be associated with a drop in performance in the Runes protocol. The project was launched on the day of the fourth Bitcoin halving – April 20. The ability to create altcoins on the BTC network has attracted a huge number of users, causing fees and transaction volumes to reach record levels.
However, despite its promising debut, recent data suggests that Runes is losing users. By May 12, the rate of minting tokens dropped to a couple of dozen per day. For comparison, on April 20, more than 10,600 coins were minted in the protocol.
“After an incredible first week, when the total amount of commissions exceeded $135 million, only two of the last 12 days reached $1 million. The lowest activity was recorded on May 10,” noted analyst Budhil Vyas.
Additionally, enthusiasm for spot Bitcoin ETFs has been fading in recent weeks. Trading volumes are declining, and some funds are left with zero inflows or go into the red.
