Bitcoin network activity has fallen to a minimum in eight years, but the price has hardly reacted to this.
According to CryptoQuant, the number of active BTC addresses on April 8 fell to its lowest level since 2016. Meanwhile, a fresh estimate from Glassnode shows 661,313 active addresses per day. When compared to a price of around $78,000, it creates a rather strange picture that deviates from the usual market logic.
It was previously thought that weak activity in the network indicates a weak market. But now this connection no longer works so directly.
The fact is that more and more transactions with Bitcoin are occurring off the main network. A significant portion of demand simply does not reflect on-chain.
For example, the BlackRock IBIT fund provides access to BTC through exchange-traded funds, while futures on CME are settled in cash. In both cases, investors gain exposure to Bitcoin but do not use wallets, do not create addresses, and do not enter on-chain metrics.
As a result, price formation is increasingly occurring not in the network itself, but in the order books of ETFs and futures markets.
This is where the gap in the charts arises. On one side is the market mood, on the other — the fact that Bitcoin has effectively created a second market structure on top of the classic one.
What is happening with market participants
On-chain data confirms one important thing. Retail investors have noticeably cooled and no longer play a key role.
The Accumulation Trend Score index from Glassnode is currently at 0. This means either distribution or a lack of accumulation. As of April 1, analysts noted that demand remains significantly lower than levels typically formed at market bottoms.
By April 8, the formulations became even stricter. The discussion was already about weak activity, lack of confidence among participants, and declining interest both in spot and derivatives. All of this resembles a cautious market without a clear mood.
At the same time, the volume of illiquid BTC supply, according to Glassnode on April 16, reached 13.45 million coins. This is a large portion of the supply that is held by holders who are not inclined to sell. Combined with low address activity, this indicates a market where fewer and fewer coins are actively participating in trading.
To generate new strong demand, a completely different signal is needed. If coins are not moving, it rather indicates a tight supply than weakness.
According to Glassnode as of April 13, ETF interest remains stable, even despite the cooling of on-chain activity. The price of BTC has increased by 51.7% during this time, while open interest in futures has risen by 7.2%.
CoinShares also reports an inflow of $1.1 billion into digital investment products for the same week, of which $871 million was attributed to Bitcoin. This is the best result since early January.
At the same time, trading volumes at the level of $21 billion are still noticeably below the average from the beginning of the year, which is $31 billion. This picture is characteristic of a narrow market, where money flows in, but broad participant activity does not occur.
Who is currently holding the price
According to Glassnode as of April 15, spot purchases on Binance are outpacing Coinbase. This complicates the popular narrative that the market has completely come under the control of American institutions.
Coinbase is usually seen as an indicator of flows from the U.S., including institutions and retail, while Binance reflects offshore demand more. When Binance is ahead and Coinbase is lagging, it indicates not a single driver of growth but a mix of different participants. Individual institutional investors, offshore buyers, and traders operating through derivatives remain in the game.
At the same time, banks continue to prepare infrastructure for entering the market. On April 14, Goldman Sachs filed an application for its first Bitcoin ETF. Earlier, in January, Morgan Stanley filed applications for ETFs related to Bitcoin and Solana. Essentially, this is the creation of channels through which capital can enter BTC without on-chain involvement.
Activity in the derivatives market is also rising. By April 10, open interest in futures on CME reached 23,827 contracts with a nominal value of $8.77 billion. For comparison, on April 1, it was 21,180 contracts and $7.24 billion.
At the same time, data on ETFs do not provide a clear signal. As of April 16, IBIT received an inflow of 1,088.13 BTC, MSBT added another 177.76 BTC. However, FBTC lost 478.92 BTC, GBTC — 317.49 BTC, and smaller funds also showed outflows.
As a result, a mixed picture emerges. There are enough purchases to offset sales, but they are still insufficient for a sustainable inflow, which usually indicates strong market confidence.
If you put everything together, it is clear how the market is currently arranged. Retail investors are showing almost no activity, which is confirmed by the low number of addresses and lack of accumulation. There is institutional demand, but it is sporadic and uneven. Banks are only building infrastructure for future capital inflows. Offshore buyers continue to play a noticeable role, especially through Binance. Derivatives traders are gradually returning, as seen from the growth in open interest. However, a significant portion of the supply remains in the hands of long-term holders who are in no rush to sell, but this does not imply the emergence of new demand.
Over-the-counter demand becomes the connecting link
If the current spot activity of institutions is just the beginning of a larger market reversal, everything will depend on several key factors going forward. First and foremost, inflows into ETFs must become stable rather than episodic.
Open interest on CME should continue to grow, and activity on Coinbase should pick up and at least approach the level of Binance, where offshore demand is currently concentrated.
At the same time, on-chain activity should begin to revive. If institutional demand can stabilize prices, it may gradually bring retail participants back to the market.
Glassnode identifies two key levels. The first is $78,100, the so-called True Market Mean. The second is $81,600, the average entry price for short-term holders. A confident consolidation above these levels will signal that the current demand is sufficient not only to hold the price but also for new capital inflows.
In such a scenario, Citi's base forecast of $112,000 over the year looks quite realistic. A bullish scenario targeting $165,000 is possible if demand from investors truly begins to expand.
The macro situation can also accelerate this process. Fed representative Christopher Waller stated that a quick resolution of the conflict in the Middle East could preserve chances for rate cuts later this year.
Goldman Sachs, Morgan Stanley, and Bank of America still expect two rate cuts starting in September.
If energy prices remain under control and the Fed begins to cut rates earlier than the market expects, liquidity conditions will improve significantly.
In this case, Bitcoin, as an asset sensitive to liquidity and interest rate expectations, may receive additional support and continue to grow.
Narrow demand amid macro pressure
There is also a stricter interpretation of what is happening. The market is currently sustained not by a broad base of participants, but by specific capital flows.
In such a configuration, everything is quite fragile. Inflows into ETFs may reverse, offshore buyers may reduce activity, and derivatives traders may quickly change direction.
Glassnode, in its report from April 15, directly calls the current recovery unstable and dependent on flows rather than confident demand. If the macroeconomic situation remains tight longer than expected, as Deutsche Bank predicts, anticipating the Fed to maintain rates until 2026, such growth will lack fundamental support.
Glassnode sees the first support zone in the range of $69,000 — $71,500. This range is largely formed by positioning in the options market. Below, there is a level around $54,000. This is the so-called Realized Price, the average purchase price of all BTC supply. In case of serious pressure, the market may indeed come there.
Citi's forecast in a recessionary scenario, where BTC drops to $58,000, actually falls within this range and sets a lower boundary over the horizon of the year.
If you break down possible scenarios, the picture looks like this.
If over-the-counter demand begins to expand, inflows into ETFs become stable, open interest on CME continues to grow, Coinbase catches up to Binance in activity, and on-chain metrics start to recover, then the market will have a foundation for stronger growth. In this case, the key benchmarks remain the levels of $78,100 and $81,600.
If the current situation persists but without strengthening, the market may simply get stuck in a sideways range. In this scenario, inflows into ETFs will remain mixed, Binance will continue to dominate, and on-chain activity will remain weak.
However, if spot support begins to crumble, for example, through outflows from ETFs, worsening macro conditions, and weakening spot demand, the first pressure zone will be the range of $69,000 — $71,500.
And in the case of a deeper correction, against the backdrop of a general risk-off sentiment, the market may drop to the range of $58,000 — $54,000, which currently appears to be the extreme negative scenario.
The problem with such a market lies in its structure. When the main activity is concentrated off-chain and supported by a limited circle of participants, it becomes much more sensitive to changes in sentiment and capital flows.
A high share of illiquid supply means that coins are in no hurry to enter the market. But at the same time, the low activity of addresses indicates that there are also few new participants. As a result, price support may turn out to be much narrower than it seems at first glance.
The question that remains open
Currently, active addresses are at a minimum over the last eight years, while the price hovers around $78,000. This looks like a market that has already restructured for over-the-counter platforms but has not yet fully realized it.
The base layer of Bitcoin continues to exist, but price formation is increasingly shifting beyond its boundaries.
The key signals to watch for are quite clear. Will on-chain activity recover alongside rising prices? Will Coinbase catch up to Binance in spot demand? Will inflows into ETFs become stable? And will open interest on CME continue to grow?
If these factors begin to move in the same direction, the current model will gain stability. However, if they diverge, maintaining the market solely through specific flows will become increasingly difficult.
#BTC #etf #BitcoinETFs #Binance #Write2Earn
