The recent escalation of Bitcoin prices soaring past the $107,000 threshold has ignited excitement among investors. Many are speculating on the possibility of reaching uncharted territory with new all-time highs later in the cycle. However, this particular bull market seems to diverge from prior trends, especially in terms of network engagement.
The Divergence in Bitcoin Network Dynamics
With Bitcoin’s impressive performance beyond the $100,000 level, the current bull cycle appears strong. Yet, this time around, there is an evident departure from established patterns characterized by robust engagement on the network.
Industry analyst Darkfost has highlighted significant differences between the present circumstances and historical bull runs in a post on the X platform. “This cycle offers a unique narrative. When analyzing Bitcoin network participation, it’s particularly evident,” Darkfost noted.
Unlike previous bull markets that saw explosive transaction volumes, rapid wallet growth, and elevated network fees, the current phase is marked by a relative lack of blockchain activity.
Experts emphasize that this is the first time in a Bitcoin bull run where on-chain activity is not witnessing an uptick, signaling a significant deviation from historical trends. An analysis of active Bitcoin address counts reflects a concerning downturn.
Statistics show that Bitcoin’s active addresses peaked at approximately 1.5 million in 2021 but have since plummeted to around 740,000, indicating a trend of reduced network engagement. This decrease poses questions about the sustainability of the current market surge.
Impact of Bitcoin ETFs on Investment Behavior
Typically, Bitcoin’s network activity ramps up following a bear market; however, this has not happened since early 2023. The rollout of Bitcoin Spot Exchange-Traded Funds (ETFs) coincided with a noticeable decline in transaction activities.
Regarding the drop in 2024, Darkfost noted that many investors might prefer to engage with Bitcoin indirectly through ETFs rather than direct ownership. This strategy allows them to bypass the risks associated with individual asset custody and transaction management complexities.
This shift towards ETF-based investments might signal a profound change in how market participants are engaging with Bitcoin, which has implications for on-chain metrics. As fewer investors participate directly, speculation arises over whether the current price rally is driven primarily by speculative interest or institutional investment, rather than broad public engagement.
