Bitcoin activity down 42% – Why analysts expect deeper BTC pullback

Bitcoin [BTC] price may be steadying right now, but things are shakier than they look.

A lot quieter than it used to be...

According to Santiment, network participation has dropped since the last cycle peak in 2021.

Bitcoin addresses making transactions has fallen by around 42% over the past five years. At the same time, new address creation is down by roughly 47%. User growth is at a much slower pace, even though prices reached new highs in recent years.

Perhaps demand is not as strong as it appears. For any sustained recovery, real usage (not just price) needs to pick up again.

Losses are piling up

This drop is now showing up where it hurts most – investor profits.

A recent report by GugaOnChain revealed that Bitcoin traders are sitting on nearly $27.89 billion in unrealized losses, equal to a 23% drop in value. These losses mostly belong to self-custody holders who bought Bitcoin recently and are now underwater with falling prices.

Profits turned into losses as Bitcoin declined, wiping out months of gains. ETF investors are also feeling the pressure, with $8.5 billion already lost since October.

Adding to the caution, Nic Puckrin, co-founder of Coin Bureau and lead market analyst, told AMBCrypto,

“Bitcoin hasn’t reached its bear market bottom yet. Historically, these have aligned with the 200-week moving average or on-chain signals, which... somewhere between $58,000 and $55,000, which is the average acquisition price of all coins.”

Where do we go from here?

According to analyst burakkesmeci, Bitcoin recently fell below the New Whales’ realized price of $88.7K. Once this happens, Bitcoin usually tends to move toward lower support zones.

The next critical levels are the Binance user deposit address realized price at $58.7K and the overall realized price at $54.7K. These levels represent the average cost basis for many holders. They are also often considered as support.

Greater pressures may also hold the market back. Puckrin noted,

“Right now, the liquidity backdrop isn’t conducive to a meaningful rebound... This simply isn’t the environment for a structural rally.”

Final Summary

• Bitcoin’s next move could define the yearly trend.
• Recovery may take longer than expected.