Recent data show a decline in Bitcoin network activity, reaching a new yearly low. This might indicate changes in the cryptocurrency's fundamentals.
Decline in Bitcoin Transaction Activity
At its peak, the Bitcoin network recorded over 734,000 transactions daily. However, on February 5, 2025, it dropped to 346,000, a decrease of over 53%. The introduction of the Runes protocol in April 2024 led to a surge in transactions, but now interest has waned, affecting overall activity.
Impact of Macroeconomic Factors
The decline in activity is not occurring in isolation. The leading cryptocurrency is feeling the effects of macroeconomic forces, such as U.S. President Donald Trump's economic policies. The tariffs on imports from Canada, Mexico, and China sent shockwaves through global financial markets, impacting BTC, which lost 7.5% in a day, falling to $91,969. These tariffs prompted investors to seek stable assets like the U.S. dollar, avoiding more volatile assets like BTC.
Comparison with Bitcoin Price
BTC has been caught in a declining trend, with on-chain activities reaching a 12-month low. According to CryptoQuant, BTC is currently overvalued on the Metcalfe Valuation Bands valuation model, which estimates its value between $48,000 and $95,000. Despite economic challenges and tariffs, BTC is traditionally viewed as a hedge against inflation, which could translate to increased demand and value in the long run.
The decline in Bitcoin network activity and economic shifts may have long-term implications for the cryptocurrency. However, BTC's resilience and its role as a hedge asset may support its position during periods of economic uncertainty.
