Bitcoin Remains Steady Above $104,000 Amid Low Transaction Counts

Bitcoin remains stable above $104,000 amid market consolidation. Despite high prices, transaction counts have dropped significantly, attributed to reduced non-monetary transactions. The shift to centralized exchanges has increased off-chain trading volumes, raising concerns over market stability due to growing derivatives interest.

Bitcoin has been trading above $104,000, holding steady amid what many describe as a broader market consolidation. According to glassnode, the cryptocurrency has shifted its trading activity to centralized exchanges, while network activity has notably declined. This suggests that even with Bitcoin’s price hovering nearly at its all-time high, the actual transaction count is experiencing lows not seen for a while.

Recent figures from glassnode indicate that Bitcoin’s remarkable climb past the $100,000 mark is paralleled by a dip in transaction counts. The data points to a reduction in non-monetary transactions, leading to diminished overall throughput on the blockchain. The average transaction value is around $36.2K, which suggests that while the volume is down, the transactions that are happening still carry significant value.

Despite the impressive market value increases, there seems to be a disconnect with underlying network usage. Historically, surging prices tend to spark increased on-chain activity—heavily congested networks and skyrocketing transaction fees. However, the current landscape shows Bitcoin’s low fees remain paradoxically unchanged as trading persists near its peak prices.

As the volume has shifted largely towards centralized exchanges, glassnode noted that off-chain trading, including spot and derivative markets, is now 7-16 times larger than activities directly on the blockchain. This points towards a significant and growing reliance on centralized platforms for Bitcoin trading this cycle.

Furthermore, with this rise of off-chain volume, there’s been a notable increase in derivatives open interest, reflecting a shift towards more leveraged trading strategies. Glassnode marked a transition beginning in January 2024 after the US Spot ETFs were launched, leading to greater volatility in the market level of open interest.

This upward trend in volatility could signify a broader market transition from traditional spot trading to one increasingly dominated by derivatives—a shift that carries risks, including potential cascading liquidations. As Bitcoin continues to trade above $104,000, the ongoing macroeconomic factors will likely further impact its price stability going forward.