Written by: Blockchain Knight
Bitcoin network activity has hit an eight-year low, with CryptoQuant data showing the number of active addresses on April 8 dropping to its lowest level since 2016.
Glassnode data indicates that the current number of active addresses in 24 hours is only 661,313, yet the price of Bitcoin has not experienced significant volatility.
This seemingly contradictory trend stems from a structural shift in market dynamics, with an increasing number of transactions moving off-chain. On-chain activity can no longer reflect the true market heat.
Off-chain trading has become the core arena for price discovery. Bitcoin ETFs like BlackRock's IBIT and CME Bitcoin futures provide Bitcoin exposure through off-chain methods. Fund managers rotate investments through these channels without needing to use wallets and addresses, thus their activity is not captured by Glassnode's statistics.
Goldman Sachs and Morgan Stanley have also submitted applications for Bitcoin ETFs, constructing capital inflow channels that do not need to touch the underlying blockchain.
CME Bitcoin futures open interest continues to climb, reaching 23,827 contracts on April 10 with a notional value of $8.77 billion, indicating renewed participation by tactical traders.
The current market is characterized by capital inflows but low participation.
A CoinShares report shows that digital asset products saw a weekly inflow of $1.1 billion, with Bitcoin accounting for $871 million, marking the strongest weekly inflow since early January. However, the trading volume of $21 billion is far below the year-to-date average of $31 billion.
Glassnode data reveals that 13.45 million Bitcoins are in a state of low liquidity, held by long-term holders. The supply available for two-way trading in the market is limited, exhibiting strong supply stickiness but insufficient new demand.
ETF fund flows are mixed, with IBIT and MSBT seeing inflows, while FBTC and GBTC experienced outflows.
In the spot market, BN's purchasing pace has surpassed Coinbase's, reflecting that offshore funds and specific institutions remain the primary buyers, rather than bids from domestic US institutions. The notion of "US institutions taking over" does not hold true.
Glassnode's Accumulation Trend Score is 0, indicating the market is in a non-accumulation state. Demand remains below the level of long-term lows, and the recovery is fragile and dependent on fund flows.
Technically, Glassnode identifies $78,100 (the Realized Price) and $81,600 (the Short-Term Holder Cost Basis) as key resistance levels. A breakthrough could pave the way towards Citibank's target price of $112,000.
On the macro front, expectations for Federal Reserve interest rate cuts (Goldman Sachs, etc., anticipate two cuts starting in September) and energy price trends will impact liquidity, thereby supporting Bitcoin's trajectory.
The current Bitcoin market has restructured around off-chain trading. Low on-chain activity does not signify a sluggish market, but the foundation supporting the current price is narrow, making it susceptible to reversals in fund flows and macro tightening.
Going forward, it is crucial to monitor whether ETF inflows persist, whether Coinbase spot demand can see a reversal, whether on-chain activity recovers, and whether CME open interest continues to rise. Only when these signals align positively can the sustainability of the market recovery be confirmed.
