On-chain activity across the Bitcoin network has notably decreased compared to the heights reached during the 2021 bull run. According to Santiment Intelligence, the average daily number of active addresses, which stood at 1.12 million in May 2021, has now fallen to around 624,000. During the same period, the number of new wallets created per day also declined from roughly 489,000 to 278,000.
Signs of declining on-chain data
This downward trend has emerged despite Bitcoin’s price remaining above 2021 levels for most of the current cycle. Under normal circumstances, higher prices would typically draw increased interest from individual investors and spur more network usage. However, this time, the influx of new users has not translated as strongly into on-chain metrics.
Santiment Intelligence reports that the Bitcoin network’s current landscape looks fundamentally different from the 2021 bull market peak, with a drop of approximately 43 to 44 percent in both active addresses and new wallet creation.
Analysts closely monitor these two indicators to gauge the health of the network. While active addresses point to the number of unique participants transacting on the blockchain, the new wallet creation rate—often called network growth—measures how many users are interacting with Bitcoin for the first time.
The growing influence of ETFs
One of the key factors highlighted in the market commentary is the impact of spot Bitcoin ETFs. These products allow institutional investors to access Bitcoin’s price movements without having to open on-chain wallets or move assets directly on the blockchain. As a result, the traditional link between price action and on-chain activity may have weakened.
Mini glossary: A spot Bitcoin ETF enables investors to track the price of BTC through an exchange-traded fund, without directly buying Bitcoin. This structure is especially appealing to institutional players, as it reduces storage and operational burdens. Demand from investors can rise without a proportional increase in on-chain wallet numbers.
Santiment also points to extended periods of sideways price movement as another factor. Historically, surges or crashes in price tend to increase network activity, while calmer periods can see on-chain participation wane. The report also notes that investor interest shifting toward stocks and precious metals has contributed to the quiet spell on the Bitcoin network.
Strategy’s latest sale sparks brief dip
A recent development causing short-term market pressure came from Strategy, spearheaded by Michael Saylor, which sold Bitcoin for the first time in about 3.5 years. The company sold a total of 32 BTC for $2.5 million. According to Bull Theory, following this announcement, Bitcoin’s price briefly dipped below $72,000.
Bull Theory notes that after Strategy’s first Bitcoin sale in over three years was made public, the price of Bitcoin temporarily fell below $72,000.
Strategy is recognized as one of the largest institutional holders of Bitcoin. The firm still controls 843,706 BTC, representing nearly 4 percent of the total supply. It is reported that these holdings were amassed at a total cost of about $63.86 billion.
Michael Saylor has previously stated that Bitcoin might be sold to fund dividends, but that the company aims to purchase 20 BTC for every 1 BTC sold. Back in December 2022, Strategy sold 704 BTC for tax purposes and repurchased 810 BTC just two days later. The most recent sale stands out as minor relative to the firm’s overall holdings and long-term accumulation strategy.
