Bitcoin Stays Above $95K Despite Sluggish Blockchain Activity — Analytics Firm Breakdown | Bitcoinist.com
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Traditionally, Bitcoin prices indicate the overall health of the blockchain, with increased activity often linked to significant price movements. However, the cryptocurrency market has recently seen a noteworthy change, with prices becoming less sensitive to fluctuations in on-chain activity.
For example, Bitcoin’s price remains above $95,000, poised to reach the $100,000 mark, despite a persistent decrease in blockchain activity. An on-chain analytics firm has provided insights on how and why this phenomenon is occurring within the leading cryptocurrency.
Reasons Behind BTC Price’s Disconnect from On-Chain Activity
Crypto analytics platform Alphractal shared in a recent post on X the key factors that enable Bitcoin’s price to remain stable despite low transaction volumes and fewer active addresses. The firm suggests that BTC’s price escalation doesn’t directly correlate with enhanced blockchain usage.
Initially, Alphractal recognized a significant shift in the Bitcoin market following the approval of US spot exchange-traded funds (ETFs) in January 2024. Consequently, BTC’s value is now primarily driven by capital injections through these financial products rather than blockchain activity itself.
Source: @Alphractal on X
The analytics firm further noted that historically low market volatility plays a critical role in the reduced activity on the Bitcoin network. Minimal price movements deter traders from entering new positions, resulting in decreased on-chain engagement.
Additionally, Alphractal pointed out that speculative traders utilizing derivatives and other financial instruments are largely sustaining Bitcoin’s price. Consequently, there is diminished everyday adoption and limited practical demand for the Bitcoin network.
The firm also hinted at the macroeconomic uncertainties currently affecting global financial markets. Although conditions are improving, many investors are hesitating to act until more definitive bullish signals emerge.
Finally, Alphractal noted that artificially inflated trading volumes contribute to the apparent stability of Bitcoin’s price. “Some exchange volumes may be artificially boosted, creating a false sense of activity while genuine network usage remains modest,” the analytics platform stated.
Bitcoin Price Overview
At the time of writing, Bitcoin’s price is approximately $96,150, indicating a decline of over 1% in the last 24 hours. Despite this volatility over the weekend, the leading cryptocurrency has increased nearly 2% over the week, according to data from CoinGecko.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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