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On-chain data shows the Bitcoin network activity has recently declined into the bear market zone. Here’s what this could mean for the asset.
CryptoQuant’s Bitcoin Network Activity Index Is Flashing A Bear Market Signal
As pointed out by an analyst in a CryptoQuant Quicktake post, the Bitcoin Network Activity Index has recently been inside the bear phase. The “Network Activity Index” here refers to an indicator from CryptoQuant that essentially tracks the amount of activity that the BTC network is witnessing.
The metric uses the data of different activity-related indicators like the transaction count and daily active addresses in order to determine the situation on the blockchain.
Here is the chart shared by the quant that shows the trend in the index and its various moving averages (MAs) over the cryptocurrency’s history:
As displayed in the above graph, the Bitcoin Network Activity Index reached a peak last year, but since December, the metric has been sharply moving down, implying the demand for using the network has been waning. Generally, a surge in user activity is what provides the fuel that any move in the asset’s price needs to be sustainable, so an increase in the Network Activity Index may be considered constructive, while a decrease a bad sign.
Recently, the trend in the network activity has developed in such a manner that the index has entered into what’s considered as a “bear phase.” From the chart, it’s visible that this red signal has maintained even after the latest recovery rally.
The signal has historically come alongside bear markets for Bitcoin (arriving before the price low is in), but there was one notable exception: the second half of the bull run in 2021.
The Network Activity Index signaled a bear phase during this rally, which suggests that, from the perspective of chain usage, this run was always unlikely to last. This may be one of the reasons why the price couldn’t reach a much higher top than the May 2021 one during this bull run.
Nonetheless, Bitcoin was still able to witness a notable period of bullish momentum back then despite the Network Activity Index signal. Thus, while the latest red signal from the metric can indicate the presence of a bear market, it could also just be a signal for a buying opportunity.
In some other news, the combined market cap of the stablecoins has just reached a new all-time high (ATH), as the market intelligence platform IntoTheBlock has shared in an X post.
The capital stored in the form of stablecoins may find its way into other cryptocurrencies like Bitcoin, so a rise in their market cap might be looked at as a bullish sign for the sector as a whole.
BTC Price
At the time of writing, Bitcoin is trading around $93,800, down around 1% in the last week.
Featured image from Dall-E, IntoTheBlock.com, CryptoQuant.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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