Bitcoin network activity fades as ETF and macro trends dominate

Bitcoin’s community exercise has been weakening for six straight months, however the decline shouldn’t be exhibiting up within the headline metric many merchants watch first.

The clearer sign shouldn’t be transaction quantity, which has held up, however participation breadth. Fewer distinctive addresses are lively on the chain, even because the community continues to course of the same variety of transactions.

In a market the place worth discovery is more and more taking place by exchange-traded funds and derivatives, that cut up issues. It suggests Bitcoin’s on-chain footprint is narrowing even whereas market publicity stays lively elsewhere.

The development has develop into more durable to disregard because the bear market has dragged on.

Glassnode data exhibits Bitcoin lively addresses at about 778,680 on an eight-day common in mid-August 2025. As of Feb. 23, that determine had fallen to about 535,942, a drop of roughly 31%.

CryptoQuant has additionally flagged low community exercise for six consecutive months, describing the present stretch as an prolonged interval of weak spot in on-chain participation.

The final time the market noticed the same sample was in 2024, when Bitcoin later posted a correction of about 30%.

That doesn’t robotically indicate the identical final result now, however it reinforces the purpose that extended community softness has traditionally lined up with durations of weaker market conviction.

Breadth is falling, however throughput shouldn’t be

Bitcoin’s transaction rely has not fallen in line with the variety of lively addresses.

In mid-August 2025, transaction rely averaged about 444,000 per day. Data from Blockchain.com exhibits the typical has been about 439,000 per day over the newest 30 days.

Nevertheless, every day prints have nonetheless been unstable, starting from roughly 289,000 to 702,000, however the broader throughput development has not collapsed.

That divergence is central to the story.

If transaction quantity is holding regular whereas lively addresses are falling, it means fewer entities are accountable for a similar quantity of on-chain exercise.

That may occur for a number of causes, and none of them require a surge in retail exercise. Exchanges and custodians can batch withdrawals.

Bigger gamers can consolidate transfers. Institutional flows may be dealt with by fewer wallets. Operational exercise could cause bursts in transaction counts with out signaling a broader return of customers.

The result’s a series that also appears busy at occasions, however with thinner participation beneath.

That is why the decline in breadth is extra revealing than uncooked throughput. A flat transaction rely can masks a market the place exercise is more and more concentrated amongst repeat transactors, giant entities, and operational flows.

In that setup, Bitcoin’s chain stays practical and lively, however much less consultant of broad person engagement.

Blockchain analytical agency Santiment has framed the backdrop in even starker phrases over an extended time horizon.

The agency mentioned that since February 2021, Bitcoin has seen 42% fewer distinctive addresses making transactions and 47% fewer new addresses created.

Santiment didn’t current that as proof that crypto is lifeless or {that a} multi-year bear market is locked in, however it did describe a bearish divergence that constructed by 2025, as market caps rose whereas Bitcoin’s utility metrics weakened.

That very same stress is now exhibiting up within the six-month development. Value and market narratives can keep alive whereas the chain itself turns into quieter.

Low charges level to skinny demand for blockspace

Charges reinforce the concept Bitcoin is in a thin-demand regime on Layer 1.

Information from mempool.house exhibits that the blockchain community’s current common transaction charges have been round $0.24, or about 1.8 sats/vB.

These are low ranges for a community that, in prior cycle peaks, has seen sustained competitors for blockspace. On the present transaction tempo, that price degree implies below $100,000 per day in transaction price income for the community.

That continues to be small relative to the block subsidy, which continues to be about 450 BTC per day.

This isn’t an instantaneous safety downside, and it doesn’t imply Bitcoin’s safety mannequin is below near-term stress.

It’s because the block subsidy continues to dominate miner income, however it does underline a longer-term actuality that Bitcoin has not been pressured to confront on this section of the cycle.

The transition towards a extra fee-supported safety price range, a subject that returns each cycle, shouldn’t be being examined on this surroundings as a result of price demand is weak.

In sensible phrases, right now’s quiet price market delays that debate.

The chain shouldn’t be below stress from sustained congestion, and customers are usually not competing aggressively for inclusion. That may change shortly in a volatility occasion, a speculative wave, or a brand new demand shock, however it has not occurred but.

For now, blockspace appears underused relative to prior bull phases, which inserts the broader image of diminished participation breadth.

CryptoQuant’s framing, that low community exercise is usually linked to low curiosity within the asset and durations of broad losses, additionally matches this price surroundings.

When curiosity falls, fewer new individuals arrive, fewer discretionary transfers occur, and price stress fades.

Bitcoin can nonetheless commerce actively as a monetary asset, however the chain itself not displays broad engagement.

Macro situations and ETF flows are altering how Bitcoin trades

The macro backdrop helps clarify why this development has continued.

Bitcoin is more and more buying and selling like a macro-sensitive, high-beta asset, particularly throughout risk-off durations.

Over the previous 12 months, US inflation has cooled, with CPI at 2.4% 12 months over 12 months in January 2026, and the Federal Reserve’s goal vary has been cited at 3.50% to three.75% in late January.

In an easier market, cooling inflation may need supported a cleaner danger rebound.

As a substitute, markets have targeted on volatility catalysts, together with tariff-policy uncertainty, which has pushed charges and the greenback round and saved broader danger urge for food unstable.

In that form of surroundings, each retail and institutional traders typically scale back churn. Retail participation falls. Merchants transfer much less typically. Establishments can keep engaged, however they’re extra more likely to modify publicity by merchandise that don’t require shifting cash on-chain.

That’s the place spot Bitcoin ETFs develop into central to the story.

Data from Coinperps present multi-week internet ETF outflows, together with about $3.8 billion over 5 weeks and about $4.5 billion in year-to-date outflows.

That shifts exercise away from self-custody wallets and towards brokerage accounts.

It additionally helps clarify why the market can stay lively whereas the chain grows quieter. Publicity continues to be altering arms, however extra of that change is being expressed off-chain.

That may be a significant shift in Bitcoin’s function. It more and more appears like a monetary product with an institutional wrapper, whereas Layer 1 is used extra selectively for settlement, storage, and periodic transfers.

On the identical time, every day transactional power throughout crypto is concentrating in different areas, particularly stablecoins.

Coin Metrics has highlighted stablecoins as a core driver of on-chain exercise, with a provide of almost $300 billion and rising transaction volumes.

If stablecoin rails on different chains are dealing with extra day-to-day settlement, Bitcoin’s Layer 1 naturally turns into narrower in operate.

That doesn’t, by itself, weaken Bitcoin’s funding thesis, however it does change its form.

Three situations for the subsequent three to 6 months

The present six-month decline in community breadth units up three believable paths for Bitcoin over the subsequent three to 6 months.

The primary is a continuation of apathy, which appears like the bottom case in a risk-off tape.

In that state of affairs, lively addresses stay depressed, in a 450,000 to 600,000 vary, transaction counts keep uneven however don’t collapse, and costs stay low. ETF flows keep flat to unfavourable.

Right here, Bitcoin can nonetheless transfer sharply on macro headlines, however on-chain participation doesn’t verify a broad restoration. The asset trades like a macro instrument, not like a community getting into a recent enlargement section.

The second is a liquidity thaw, which is the extra constructive path.

If cooling inflation and easing expectations stabilize danger urge for food, ETF flows may shift from outflows to sustained inflows. In that surroundings, lively deal with development would develop into the important thing affirmation sign.

On this case, a rebound towards 650,000 to 800,000 lively addresses would recommend that participation breadth is returning, not simply worth momentum. That may look extra like a traditional cycle restoration, with worth positive aspects supported by rising on-chain person engagement.

The third is the structural displacement state of affairs, which can be a very powerful to observe.

In that state of affairs, Bitcoin rallies, however on-chain breadth stays muted. ETFs, derivatives, and custodial settlement proceed to dominate, whereas stablecoins take up extra transactional demand elsewhere in crypto.

Right here, Bitcoin continues to carry out more and more as a digital macro asset and settlement layer, reasonably than as a series with broad, day-to-day retail exercise. T

That state of affairs would sign an evolution in Bitcoin’s function, reflecting the way it has modified from what it was years in the past.