Bitcoin Network Activity Dives To 3,760, Marking A One-Year Low; Index Down 15% Since November

The CryptoQuant Network Activity Index for Bitcoin has dropped by 15% since its peak in November 2024, which is the lowest level in over a year. The index is now 3,760, hence its weakest performance since February 2024.

Reduced RUNES Protocol Usage and Transactions

Most of the sharp decrease in activity can be blamed on a major drop in Bitcoin transactions. From the September 2024 historical peak of 734,000 daily transactions are now at 346,000; this represents a sharp drop of 53%.

One of the main reasons for this is the reduced activity of RUNES protocol which otherwise has seen a lot of activity since inception in April 2024. Initially, it caused a surge in usage, it was first used for minting and moving tokens via OP RETURN codes, with daily OP RETURN usage hitting 802,000. The number has sunk to only 10,000, however, indicating a dramatic drop in token-driven operations on the Bitcoin network.

Near-empty Mempool Underscores Network Slowdown

The slowdown is also visible in the Bitcoin mempool, which tracks unconfirmed transactions waiting to be added to the blockchain. There are 3k transactions in the mempool, down from 287k in December 2024, a 99% reduction. We haven’t seen numbers this low since March 2022, so it’s a significant drop-off in overall network usage.”

Implications for Bitcoin’s Fair Value

With network usage this low, Bitcoin’s current price of $99,000 might be inflated. The slowdown suggests the cryptocurrency could be overvalued, as its activity levels no longer align with its market price. Thus the Metcalfe Valuation Bands show fair value between $48,000 and $95,000 so the price does seem inflated based on activity-based value.

The diminished network activity could suggest a transitory adjustment period for the token as the system starts to respond to decreasing interest in protocols like RUNES. As an indicator of the token’s underlying strength, investors will probably monitor network activity trends.