Bitcoin Activity Dwindles Amid Market Skepticism
According to market intelligence from IntoTheBlock, the number of active Bitcoin addresses has declined to its lowest level since November 2010.
In June, only 1.22% of weekly active wallets were engaging in buying and selling activities on the blockchain. On May 27, a total of 614,770 active wallets reached a historical low, not seen since December 2018.
What Drives Decline in Bitcoin Activity
Juan Pellicer of IntoTheBlock notes that reduced participation from retail investors compared to previous cycles is attributed to a decline in activity on the network.
Retail investors seem to have contributed less to the growth this year as institutional capital driving the increase at a record level.
This decline follows the recent deterioration in retail investors’ sentiment resulting from various economic conditions.
Furthermore, the fall in activity coincides with lower interest rates for the Runes fungible token. Pellicer believes these trends are cyclical by nature, with transaction fees slowly returning to normalization.
Fear Looming On the Horizon
Mt. Gox payments to creditors in a mere month potentially could exert severe market pressure with the possibility of increased sell-offs given the BTC repayment for previous transactions potentially tripled for some borrowers.
The upcoming events may negatively impact the market momentum. According to JPMorgan analysts, credit holders are incentivized to monetize their BTC soon, citing a 60% increase as the new norm and potentially inducing more selling than buying among the Mt. Gox affected.
On a more optimistic side, FTX creditors will receive fiats once the repayment process concludes and may reassess their cryptocurrency stance, potentially steadying the market’s volatility through reinvestment after September if analysts’ views are correct and creditors reentry into digital assets could reverse the downward swing.
