On-chain data shows the Bitcoin transaction volume has seen a pointy plunge since its high last 12 months. Here’s what this might imply for BTC.

Bitcoin Transfer Volume Has Declined To Just $11.2 Billion

In a recent post on X, the on-chain analytics firm Glassnode has talked concerning the latest trend within the Total Transfer Volume for Bitcoin. The “Total Transfer Volume” here refers to a metric that measures the full amount of the cryptocurrency (in USD) that’s becoming involved in transactions on the network daily.

When the worth of this indicator is high, it means the investors are moving around large amounts on the blockchain. Such a trend suggests the trading interest within the asset is high.

However, the metric being low implies the traders will not be paying much attention to the asset as they aren’t participating in much transaction activity.

Now, here is the chart shared by Glassnode, that shows the trend within the Bitcoin Total Transfer Volume over the past couple of years:

The worth of the metric appears to have been climbing in recent days | Source: Glassnode on X

Within the graph, the version of the Bitcoin Total Transfer Volume displayed is the “Entity-Adjusted” one. What this implies is that the indicator only keeps track of the transfers happening between different entities, not individual addresses.

An ‘entity‘ is a cluster of addresses that the analytics firm has determined to belong to the identical investor. Transactions between the wallets of the identical owner are naturally not relevant for the broader market, so adjusting for entities could make the indicator output more accurate results.

From the chart, it’s visible that the Entity-Adjusted Total Transfer Volume witnessed a pointy surge towards the tip of last 12 months. This increase within the indicator got here because the cryptocurrency explored recent all-time highs (ATHs) beyond the $100,000 mark.

Investors often find such rallies to be exciting, so it’s not surprising that the one from the last couple of months of 2024 also amassed a considerable amount of attention.

Since hitting an ATH of $20.7 billion in December, though, the metric has witnessed an prolonged drawdown, implying activity has waned on the network. Today, the chain is processing just $11.2 billion in inter-entity volume, a decrease of virtually 46% from the height.

Transaction activity from the investors is what provides the fuel for rallies to be sustainable, which could also be why the slowdown within the cryptocurrency’s price has come after the drawdown in the amount.

That said, while the newest volume is significantly lower than the ATH, it’s actually still really high in comparison to history. As Glassnode has highlighted within the chart, there have only been 67 days in BTC’s lifetime where the network has seen a better amount of transaction activity.

BTC Price

On the time of writing, Bitcoin is trading around $105,300, up almost 3% within the last seven days.

Looks like the worth of the coin has been moving sideways over the previous couple of days | Source: BTCUSDT on TradingView

Featured image from Dall-E, Glassnode.com, chart from TradingView.com