Bitcoin Price Rises Amid Falling Network Activity
Key Takeaways
- Bitcoin (BTC) is back in profit territory for short-term traders – the profit margin rose from -19% in April to +21% in May.
- At the same time, key on-chain metrics such as transaction volume and user activity are showing declining trends.
- The discrepancy between price increase and network activity raises questions about the sustainability of the upward trend.
- Derivatives markets indicate growing uncertainty: long and short positions are nearly balanced.
Returns Are Back – Short-Term Traders in the Green
Short-term Bitcoin holders are once again seeing profits. The so-called profit/loss margin – the difference between purchase price and current market price – rose from -19% in April to +21% in May, according to recent data. This suggests renewed optimism in the market. The 30-day moving average of this margin is also at +9%, still well below the critical threshold of +40%, where profit-taking often begins.
Realized Price Stabilizes – A Sign of Accumulation
The Realized Price – the average purchase price of coins – for BTC holders over the past 1 to 3 months currently sits at around USD 84,600. This indicates that many investors entered the market at this price range and are holding their positions. A stable Realized Price can be a sign of an accumulation phase.
Valuation Rising Faster Than Usage
Despite positive price developments, there are warning signs. The Network Value to Transaction (NVT) ratio – a measure of market capitalization relative to transaction volume – rose nearly 70% to 52.81. A high NVT value can indicate that the price is rising faster than the actual network usage. Historically, such increases often precede local price peaks.
Decline in Network Activity and Transactions
Daily activity on the Bitcoin network is moving in the opposite direction of the price. The number of daily active addresses is down significantly at -241.32%. The number of transactions also decreased to 67,200, while network growth fell to 52,900. Such declines point to waning interest and reduced activity – unusual during a price rally.
Stock-to-Flow Decline Signals Reduced Scarcity
The Stock-to-Flow (S2F) ratio measures the scarcity of a commodity – in this case, Bitcoin – by comparing existing supply to new production. The value dropped by 16.66% to 1.0595 million. This could mean that more BTC is entering circulation, either through miner sales or reduced accumulation by long-term holders. A declining S2F ratio can put medium-term pressure on the price if demand doesn’t keep up.
Derivatives Market Reflects Uncertainty
A look at the derivatives market reveals growing uncertainty. The long-to-short ratio stands at 0.9964 – nearly balanced. Long positions account for 49.91%, while short positions make up 50.09%. This even distribution indicates that traders currently expect no clear direction. After a phase dominated by long positions, this signals caution.
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Our Assessment
Bitcoin’s price remains strong, and short-term traders are benefiting again. However, the fundamental data presents a mixed picture. Low network activity, declining transaction numbers, and reduced scarcity suggest that the current upward trend is not fully supported by actual network usage.
If you’re investing in Bitcoin or considering it, you should take these warning signs seriously. A sustainable price increase requires not just optimism, but also real usage and demand. So don’t just watch the price – keep an eye on the underlying data as well.
Sources
- CryptoQuant
- Santiment
- CoinGlass
| Symbol | BTC |
| Coin type | Alt Coin |
| Transaction Speed | Slow |
| Pros |
|
| Cons |
|
| Further practical applications | |
| Price | 105393 |
| 24h % | 2.21 % |
| 7d % | 1.15 % |
| 30d % | 24.66 % |
| 60d % | 25.14 % |
| 1y % | 57.69 % |
| Market Cap | $2,093,273,310,035.00 |
| Max. Supply | 21,000,000.00 |
| Official Links | Website | Whitepaper | Source Code |
| Socials | Reddit | X | Message Board |
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