Bitcoin network: Data shows that it is slowing down

A detailed analysis of transaction volume, circulation and NVT divergence, and daily active addresses has revealed a slowdown in Bitcoin network activity. The gap between the rise in prices and the slowdown in network activity raises concerns about the sustainability of Bitcoin’s growth and the possibility of increased market volatility.

On-Chain Data Shows Bitcoin Network Activity is Slowing Down 🔗 Read more: https://t.co/a13HnBwjvr

— BeInCrypto (@beincrypto) April 28, 2023

Analysis of key measures of the Bitcoin network

Transaction volume represents the total number of BTC traded on various exchanges during a certain period. The data shows that it has sharply decreased. This figure is one of the most important for measuring market liquidity and investor interest. Therefore, this decrease could mean that investors are skeptical about Bitcoin’s future. It may also mean that they are converting their bitcoins to other cryptocurrencies.

The number of daily active addresses represents the number of unique addresses that participate in transactions on the Bitcoin network each day. It gives an idea of the overall engagement, adoption, and activity of the Bitcoin network. Its decrease may mean that there is a divergence between market value and actual use of Bitcoin. This is a long-term risk for Bitcoin price increases.

Circulation refers to the number of individual tokens moved between addresses on the Bitcoin network per day. It represents users’ propensity to make Bitcoin transactions. Its decrease means that users are holding onto their coins in anticipation of future price increases or focusing on other cryptos.

Is the bull market a mirage?

The Network Value / Transactions (NVT) ratio is a measure that compares Bitcoin‘s market value to the volume of transactions on its network. A low NVT ratio indicates that the network is undervalued and could lead to increased volatility. As BeInCrypto indicates, the Bitcoin market, which appeared to be on the rise, may soon experience a correction. However, volatility should no longer frighten investors as it is part of the nature of cryptocurrencies. The figures observed on the Bitcoin network may be due to external factors rather than BTC itself.

The US Congress recently announced a cryptocurrency regulation bill. This time, the upper house of the US parliament really intends to establish a legal framework for crypto transactions. Could this be the cause of the disruption on the Bitcoin network?