While activity on the Bitcoin blockchain appears to be particularly low, the price of BTC remains close to its all-time high (ATH). Let’s take a closer look at this paradox.
ETFs and Bitcoin Treasury Companies are supporting the price of BTC despite the lack of activity
Bitcoin (BTC) is currently trading at $108,700, up 0.6% over 24 hours. Despite relatively stagnant prices since the end of May, this level remains close to its all-time high (ATH) of $111,800.
However, network activity does not reflect BTC prices, as evidenced by statistics on the number of transactions in the mempool. As a quick reminder, the mempool is the number of transactions waiting to be associated with a block.
Thus, the higher the number of transactions in the mempool, the more activity there is on the Bitcoin blockchain. That said, while we saw a 12-month record of nearly 224,000 on October 12, 2024, Blockchain.com data now shows fewer than 5,000 pending transactions, following a sharp decline since February:
In terms of timing, this decline in activity more or less coincides with the inauguration of Donald Trump, which, as we have seen, consisted of a veritable “sell the news” on the crypto market. In fact, BTC fell below $75,000 last April before rebounding.
This trend suggests a lack of interest among the general public, a theory that can be supported by the performance of the search term “bitcoin” on Google Trends. And with good reason: after peaking in the week following the US election in November, we are now just 1 point away from a 12-month low:
Conversely, we can see that the price of BTC is being driven by strong institutional demand. This is reflected in particular in the $138.09 billion in assets under management in US Bitcoin ETFs, an all-time high:
While this amount represents 6.38% of BTC’s total market capitalization, we can also highlight the success of Bitcoin Treasuries. With more than 1.14 million bitcoins held by listed and unlisted companies, this represents 5.73% of existing BTC; a statistic that rises to 8.38% when the 527,654 units held by governments are added.
Returning to Bitcoin blockchain activity, the number of pending transactions in the mempool collapsed in the summer of 2021 during the previous cycle, a few months before the market peak. For 2018, we can see from the chart below that this drop in activity occurred shortly after the ATH:
While demand remains strong from institutional investors, the key question now is whether this decline in activity is a precursor to a bearish cycle, or whether a renewed interest from the general public will lead to new highs.
