Cryptocurrency analytics firm Alphractal has analyzed why on-chain activity remains lower than expected despite the price of Bitcoin exceeding $95,000.
The company’s report states that despite the market’s optimism atmosphere, trading volumes and number of active addresses remain historically low levels.
According to the Alphractal findings, there are seven main reasons behind this situation.
Prices are driven by external factors rather than on-chain use.
The current price of Bitcoin is driven by external factors such as institutional capital inflows into spot ETFs, rather than actual on-chain use.
Low Volatility:
Low volatility reduces the incentive for traders to trade and reduces trading in chains.
Amount of artificial stock market:
Exaggerating transaction volumes in some exchanges could potentially hide true usage levels on the network.
Limited practical demand:
Bitcoin prices are primarily maintained through derivatives and speculative equipment, rather than daily use in chains.
The market is in the consolidation stage:
Investors tend to wait until macroeconomic development or clear signals come in. This limits the movement of the coin.
Growth of Tier-2 Solutions:
Layer two solutions like Lightning Network, with transactions shifting off-chain and showing lower mainnet activity.
Shift in speculative activity to other networks:
Networks such as Ethereum, Solana and Base are attracting transaction-intensive activities such as Defi, stakes and Memecoins, reducing the dynamism of the main chain of Bitcoin.
Alphractal says it is revealing that in the current situation, Bitcoin is beginning to be considered a “financial asset” rather than a “blockchain technology.” This indicates that the link between on-chain usage and price is gradually weakening.
*This is not investment advice.