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Bitcoin trading slows as network activity nears all-time lows
Over the past two months, Bitcoin’s on-chain activity has approached historic lows as transaction volumes have noticeably declined.
This cooling occurs after the historical maximum of Bitcoin at the beginning of the year and is a period headline for the fear and indecision of the crowd, rather than being a predictor of further price drops.
Decline in Bitcoin on-chain activity
According to data from Santiment, Bitcoin’s on-chain transaction volume has fallen, reaching numbers last seen years ago (since 2019). This pattern indicates that traders are reluctant to transfer their positions, possibly due to market volatility.
The sharp decline in activity followed Bitcoin’s all-time high in March 2024, a milestone one year ahead of the expected timeline under historical halving cycles.
Market reaction and analysis
The sharp drop in transaction volume did not escape the attention of market analysts. As reported by Coiningape, Bitcoin tested $60,000 support on May 10 after a brief trip to $63,500.
Additionally, on platforms like X (formerly Twitter), traders suggest that institutional players may be manipulating the market to avoid significant breakouts during weekends when the ETF market is closed.
Trader and analyst Rekt Capital highlighted that Bitcoin usually takes a hit weeks after a halving event, a range he calls the “danger zone.” ”This price drop phase, which is now coming to an end, showed a drop in the price of Bitcoin to $56,500. However, long-term (LTH) holders are not selling their holdings, which could signal a possible recovery.
Price performance and economic influences
Bitcoin price performance has been volatile as the cryptocurrency has failed to sustain its move above $63,000. Pessimistic indications from stagflationary US economic data and hawkish observations from Federal Reserve authorities also weakened optimistic sentiment.
Specifically, the University of Michigan Consumer Sentiment Survey revealed a significant drop from 77.2 in April to 67.4 in May, while inflation expectations rose, heightening market concerns.
Price volatility shares the same historical pattern as Bitcoin, where post-halving periods often see large corrections. But the price trajectory this year is a far cry from the usual four-year cycle, implying that the new high could be reached relatively quickly.
Long-term holders maintain confidence
Although the price of Bitcoin has fallen in recent months, the Bitcoin Holders are still positive. According to CryptoQuant data, these holders have yet to sell their holdings after the $73,000 peak. In the meantime, so far. Bitcoin (BTC) bulls were still fighting for control of the market despite a broader market sell-off that dropped the price to an intraday low of $60,492.63. Trading at $60,908.99, BTC was 0.10% off its intraday high.
On the contrary, according to Coiningape, the long term holders seem to be hoping for a possible revival. On-chain analyst Axel Adler Jr noted that long-term holders had already sold 1.3 million BTC at the peak but are currently holding on to their assets in anticipation of a local fund.
Such an act shows strong faith in the long-term value of Bitcoin, as opposed to the actions of short-term holders, who have been seen participating in a series of profit-making events. Now, the market is analyzing key economic data and upcoming events that include PPI and CPI reports as well as a speech from Fex Chairman Jerome Powell that could affect Bitcoin’s trajectory in the coming weeks.
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