Bitcoin’s network activity has been weakening for six months in a row, but the decline isn’t showing up in the main metric that many traders look at first.
The clearer signal is not transaction volume, which has held up, but the breadth of participation. There are fewer unique addresses active in the chain, while the network continues to process a similar number of transactions.
In a market where price discovery is increasingly done through exchange-traded funds and derivatives, things are divided. It suggests that Bitcoin’s on-chain footprint is shrinking, even as market exposure remains active elsewhere.
The trend has become harder to ignore as the bear market drags on.
Glass junction facts shows active Bitcoin addresses at about 778,680 on an eight-day average in mid-August 2025. By February 23, that figure had fallen to about 535,942, a drop of about 31%.
CryptoQuant has that too marked low network activity for six consecutive months, describing the current period as a prolonged period of weakness in chain participation.
The last time the market saw a similar pattern was in 2024, when Bitcoin later corrected around 30%.
Now that doesn’t automatically imply the same outcome, but it reinforces the point that long-term network weakness has historically been associated with periods of weaker market conviction.
The width decreases, but the throughput does not
The number of Bitcoin transactions has not kept pace with the number of active addresses.
By mid-August 2025, the number of transactions averaged approximately 444,000 per day. Facts from Blockchain.com shows that the average over the past 30 days was about 439,000 per day.
However, daily print counts are still volatile, ranging from roughly 289,000 to 702,000, but the broader throughput trend has not collapsed.
That difference is central to the story.
If transaction volume remains stable while the number of active addresses decreases, it means that fewer entities are responsible for the same amount of on-chain activity.
That could happen for a variety of reasons, none of which require a surge in retail activity. Exchanges and custodians can make withdrawals in batches.
Bigger players can consolidate transfers. Institutional flows can be handled with fewer wallets. Operational activity can cause bursts in the number of transactions without signaling a broader return of users.
The result is a chain that sometimes still looks busy, but with thinner participation underneath.
This is why the decrease in width is more revealing than the raw throughput. An equal number of transactions can mask a market in which activity is increasingly concentrated among recurring transactions, large entities and operational flows.
In that setup, Bitcoin’s chain remains functional and active, but less representative of broad user involvement.
Blockchain analytics company Santiment has outlined the background in even starker terms over a longer time horizon.
The company said that Bitcoin has seen 42% fewer unique addresses transacting and 47% fewer new addresses created since February 2021.
Santiment did not present this as evidence that crypto is dead or that there is a multi-year bear market, but did describe a bearish divergence that built into 2025, as market cap rose while Bitcoin’s utility metrics weakened.
That same tension is now evident in the six-month trend. Price and market stories can stay alive while the chain itself becomes quieter.
Low costs indicate low demand for blockspace
Fees reinforce the idea that Bitcoin is in a layer 1 thin-demand regime.
Data from mempool.space shows that the blockchain network’s recent average transaction fees were around $0.24, or about 1.8 sats/vB.
Those are low levels for a network that has seen persistent competition for blockspace during previous cycle peaks. At current transaction rates, that rate level implies less than $100,000 per day in transaction fees for the network.
That remains small compared to the block subsidy, which is still around 450 BTC per day.
This isn’t an immediate security issue, and it doesn’t mean Bitcoin’s security model is under threat any time soon.
This is because the block subsidy continues to dominate miners’ revenues, but it does underline a longer-term reality that Bitcoin has not faced at this stage of the cycle.
The transition to a more fee-supported security budget, a recurring issue every cycle, remains untested in this environment as demand for fees is weak.
Practically speaking, today’s quiet compensation market is slowing down that debate.
The chain is not under pressure from persistent congestion, and users are not aggressively competing for inclusion. That could change quickly with a volatility event, a speculative wave or a new demand shock, but that hasn’t happened yet.
For the time being, the block space appears to be underutilized compared to previous bull phases, which fits in with the broader picture of reduced breadth of participation.
CryptoQuant’s premise, that low network activity is often linked to low interest in the asset and periods of large losses, also fits into this compensation environment.
If interest rates fall, fewer new participants will join, fewer discretionary transfers will take place and the pressure on reimbursements will decrease.
Bitcoin can still actively trade as a financial asset, but the chain itself no longer reflects widespread involvement.
Macro conditions and ETF flows are changing the way Bitcoin trades
The macroeconomic background partly explains why this trend has continued.
Bitcoin increasingly trades as a macro-sensitive, high-beta asset, especially during risk periods.
Over the past year, US inflation has cooled, with the CPI at 2.4% annualized in January 2026, and the Federal Reserve’s target range from 3.50% to 3.75% at the end of January.
In a simpler market, cooling inflation might have supported a cleaner risk recovery.
Instead, markets have focused on volatility catalysts, including uncertainty over rate policy, which has pushed rates and the dollar higher and kept broader risk appetite volatile.
In such circumstances, both retail and institutional investors often reduce churn. Retail participation is declining. Traders move less often. Institutions can remain involved, but they are more likely to adjust exposure through products that do not require moving coins in the chain.
That’s where spot Bitcoin ETFs become central to the story.
Facts from Coinperps show multi-week net ETF outflows, including about $3.8 billion over five weeks and about $4.5 billion in outflows this year.
That shifts activity from self-managed wallets to investment accounts.
It also explains why the market can remain active while the chain calms down. Exposure continues to change hands, but more of that change is reflected outside the chain.
That’s a meaningful shift in Bitcoin’s role. It increasingly resembles a financial product with an institutional package, while Layer 1 is used more selectively for settlement, storage and periodic transfers.
At the same time, the day-to-day transactional energy in crypto is focused on other areas, especially stablecoins.
Coin Metrics has marked stablecoins as the core driver of on-chain activity, with nearly $300 billion in supply and rising transaction volumes.
As stablecoin rails on other chains process more daily settlements, Bitcoin’s Layer 1 will naturally become narrower in function.
That in itself does not weaken Bitcoin’s investment thesis, but it does change its shape.
Three scenarios for the next three to six months
The current six-month decline in network width creates three plausible paths for Bitcoin over the next three to six months.
The first is a continuation of apathy, which resembles the basic scenario of a risk-off tape.
In that scenario, active addresses remain under pressure, in a range of 450,000 to 600,000, transaction numbers remain choppy but not collapsing, and costs remain low. ETF flows remain flat to negative.
Here Bitcoin can still move sharply at a macro level, but joining the chain does not confirm a broad recovery. The asset is traded as a macro instrument, not as a network entering a new phase of expansion.
The second is a liquidity thaw, which is the most constructive path.
If cooling inflation and dovish expectations stabilize risk appetite, ETF flows could shift from outflows to sustained inflows. In that environment, active address growth would become the most important confirmation signal.
In this case, a recovery towards 650,000 to 800,000 active addresses would indicate that participation breadth is returning, not just price momentum. That would look more like a classic cycle recovery, where price gains are supported by growing user involvement in the chain.
The third is the structural displacement scenario, which is perhaps the most important to watch.
In that scenario, Bitcoin recovers, but the width of the chain remains moderate. ETFs, derivatives and custodial agreements continue to dominate, while stablecoins absorb more transaction demand elsewhere in crypto.
Here, Bitcoin continues to perform increasingly as a digital macro asset and settlement layer, rather than as a chain with broad, daily retail activity. T
That scenario would signal an evolution in Bitcoin’s role, reflecting how it has changed from what it was years ago.