Is Bitcoin’s 15% network activity drop a warning sign for traders?

• Bitcoin’s network activity index falls, signaling reduced on-chain demand and a shift in market dynamics.
• Mempool transactions dropped 99%, indicating slowed speculation and transactional engagement.

The Bitcoin[BTC] network has witnessed a notable decline in activity, with key metrics signaling a slowdown in on-chain transactions.

The Bitcoin Network Activity Index has dropped 15% since November 2024’s record high, reaching 3,760, the lowest level since February 2024. This decline has also pushed the index below its 365-day moving average.

Bitcoin’s network activity index signals weakness

Bitcoin’s Network Activity Index serves as a key measure of fundamental growth.

It tracks essential metrics such as active addresses, transaction counts, and block size. Analysis of the chart showed there has been a decline recently.

The current downturn in the index suggests reduced participation, lower network congestion, and a slowdown in transactional demand.

Source: CryptoQuant

Historically, such dips have been associated with periods of market uncertainty or profit-taking cycles.

The fact that the index has fallen below its long-term moving average signals a shift in network dynamics reminiscent of previous bearish phases.

Bitcoin’s broader adoption and on-chain usage could see further slowdowns if the trend continues.

Mempool data confirms sluggish network demand

A deeper look at Bitcoin’s mempool data further supports the trend of declining activity.

The total number of transactions waiting to be confirmed has plummeted from 287,000 in December 2024 to around 3,000, marking an astonishing 99% decline. The last time the mempool was this empty was in March 2022.

Source: CryptoQuant

A nearly empty mempool typically indicates reduced transaction demand, meaning users are not competing for block space.

This is often seen during periods of reduced speculation or when on-chain activity shifts towards custodial and off-chain solutions, such as the Lightning Network.

Conversely, during bull runs or heightened adoption phases, the mempool tends to be filled with pending transactions, signaling active network engagement.

If the mempool remains at historically low levels, it could reflect a cooling-off period for Bitcoin’s speculative and transactional demand.

Bitcoin price action amid network slowdown

Despite the declining network activity, Bitcoin’s price has remained strong and was trading at $98,185. This reflects a 1.60% increase on the day. However, key indicators suggest potential risks ahead.

The 50-day Moving Average (MA) stood at $98,743, while the 200-day MA is positioned at $78,512, reinforcing a longer-term bullish structure.

However, Bitcoin was hovering near its short-term resistance level, and a failure to maintain momentum could invite further downside pressure.

Source: TradingView

Additionally, MACD readings suggest weakening momentum. The MACD line is trending lower, currently at -860.32, with a bearish divergence forming.

If this continues, Bitcoin may struggle to break above the $100,000 psychological level, leading to potential retracements towards key support areas at $95,000 and $90,000.

What does this mean for Bitcoin?

The ongoing decline in network activity and mempool congestion raises questions about Bitcoin’s immediate growth trajectory. Historically, low on-chain engagement has led to sideways price action or short-term corrections.

If Bitcoin is to sustain its long-term uptrend, a resurgence in active addresses, transaction volumes, and mempool congestion would be needed to confirm broader adoption and demand.

Additionally, macroeconomic factors, such as institutional buying and ETF inflows, will play a crucial role in dictating BTC’s next major move.

– Read Bitcoin (BTC) Price Prediction 2025-26

For now, Bitcoin traders and investors should watch for signs of renewed network demand.

If on-chain metrics remain subdued, BTC may struggle to reclaim new highs in the near term, making upcoming price movements crucial for confirming future market trends.